Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > IRS

Disability Insurance Observer: Presence

Your article was successfully shared with the contacts you provided.

You know the country has suffered a devastating natural disaster when the Internal Revenue Service (IRS) starts putting out batches of guidance about the crisis that let grief slip between the regulatory language.

The IRS has shown its human side in Notice 2012-69, which talks about how the IRS will treat employers that let employees donate the cash value of forgone vacation, sick or personal leave time to help people affected by Hurricane Sandy.

IRS officials recalled in the notice that they issued similar notices after the Sept. 11, 2001, terrorist attacks and after Hurricane Katrina.

“This guidance is provided in view of the extraordinary damage and destruction caused by Hurricane Sandy,” officials said in the notice.

The IRS said it will not try to treat the Sandy relief leave donation payments as being part of the employees’ taxable income.

Employees who make the donations cannot claim charitable contribution deductions for the donations, but employers need not include the payments on employees’ W-2 forms.

If this kind of thing keeps up, it hit me that the kinds of disability insurance companies and support companies that run absence management programs might be able to find a way to presence management niche.

Maybe employers could reduce costs related to worker absenteeism by encouraging employees to donate the value of unused leave time to others on a regular basis.

For some employees, a simple cash bonus might be a more effective reward, but, in some cases, maybe some employees would value the ability to donate the leave time to disaster victims more than direct payments of cash. The value of a direct cash payment is simply the value of the cash.

In the subconscious mind of some workers, the value of a donation to disaster victims might be the value of the cash, plus the value of the implicit request to the universe to be nice.

But it hit me that presence management programs would really need some rules, to avoid letting workers reduce the amount of leave time they take to levels that actually reduce overall company productivity.

  • Employees who have high fevers and are obviously stick should stay home, leave donation program or no donation program. Donating to storm victims is not a good reason to come to work when you have a 104-degree fever.
  • Employees should take enough leave to make sure that other colleagues know how to do their work when they are out. A company that really lets employees become indispensable is a company that will run into huge problems if those indispensable employees quit.
  • Employees should take enough leave that supervisors have a chance to detect whether any financial funny business is going on. If no one fills in for an employee enough to understand the various financial accounts an employee handles, how can anyone tell whether or not the employee is using the accounts as personal piggy banks?

See also:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.