Ukraine aid eligible for leave-based donations programs

By Paul Bonner

The IRS provided guidance Thursday on the tax treatment of cash payments employers make under a leave-based donation program to aid victims of the further Russian invasion of Ukraine, which began Feb. 24, 2022.

A leave-based donation program allows employees to elect to give up their employer-provided vacation, personal, or sick leave benefits in exchange for their employer's cash payment to a charitable organization under Sec. 170(c). Generally, under the assignment-of-income doctrine, employees must include in income as wages or compensation the cash value of such leave, even though forfeited, but a series of IRS notices have provided targeted exceptions for contributions benefiting victims of specified disasters.

In that respect, the guidance in Notice 2022-28 issued Thursday resembles more than a dozen previous notices going back more than 20 years recognizing qualifying disasters for purposes of leave-based donation programs. An early one was in response to the terrorist attacks of Sept. 11, 2001 (Notice 2001-69).

More recently, in Notice 2021-42, the IRS extended for a second year, through Dec. 31, 2021, its guidance in Notice 2020-46 regarding leave-based donation programs to aid COVID-19 pandemic victims in the United States, District of Columbia, and five U.S. territories.

Under Thursday's notice, leave-based donation payments made by an employer before Jan. 1, 2023, will not be treated as wages or compensation to the employer's employees. An employee who donates leave that funds the payments will not be treated as thereby having constructively received wages or compensation. To qualify, the employer's payments must be made to a Sec. 170(c) organization to aid victims of the further Russian invasion of Ukraine.

The IRS noted that President Joe Biden had issued executive orders establishing a national emergency with respect to actions and policies of Russia that threatened Ukraine's peace, stability, sovereignty, and territorial integrity. On March 2, 2022, Biden announced a continuation of that national emergency.

The victims of the further Russian invasion of Ukraine that leave-based donation programs may aid include Ukraine citizens and residents; individuals working, traveling, or currently present there; or refugees from the nation, the notice stated.

Employees who elect to participate in a leave-based donation program may not thereby claim a charitable contribution deduction, but employers may deduct payments made under the program as charitable contributions under Sec. 170 or as ordinary and necessary business expenses under Sec. 162 if they are otherwise eligible to do so, the IRS stated.

— To comment on this article or to suggest an idea for another article, contact Paul Bonner at

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