IRS Offers Guidance on COVID-19 Employee Leave-sharing Plans

In recently issued frequently asked questions (FAQs), the IRS said employers may set up leave-sharing plans under IRS Notice 2006-59 to benefit employees adversely affected by COVID-19.

The FAQs explain that leave-sharing plans permit employees to deposit leave in an employer-sponsored leave bank for use by other employees who have been adversely affected by a major disaster such as the COVID-19 pandemic.

Employees depositing leave in a qualifying plan:

  • Do not include the deposited leave in income or wages.
  • May not claim an expense, charitable contribution or loss deduction for the deposited leave.

The FAQs direct employers to Notice 2006-59 for information about the requirements of qualifying leave-sharing plans. Refer to the attached Compliance Bulletin for additional details.

IRS FAQs on COVID-19 Leave-sharing