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This report includes a summary of key changes, including the salary level test and salary basis test.

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October 03, 2005
Groups Promote Leave-Donation Program for Katrina Victims

A coalition of business and charitable associations and the Internal Revenue Service have joined together to educate the nation's employers about a leave-donation program benefiting Hurricane Katrina victims.

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The leave-donation program offers favorable tax treatment for employees who donate annual, sick, or personal leave back to their employer. The employer converts the leave into cash and makes a contribution to a qualified charity supporting Katrina relief and recovery efforts. The employee pays no taxes on the value of the leave, and the employer may deduct the amount as either a charitable donation or as a business expense.

"Everybody wins under this program," says IRS Commissioner Mark W. Everson. "Employees can give without paying cash. Companies get the tax deduction. And the money gets to people in need."

The business associations will share information about the leave-donation program to all their members. Among those joining the outreach efforts are:

  • U.S. Chamber of Commerce
  • Society for Human Resource Management
  • Small Business Legislative Council
  • National Manufacturer's Association
  • American Hotel and Lodging Association
  • Associated General Contractors
  • American Dental Association
  • American Payroll Association
  • American Trucking Association
  • Women Impacting Public Policy
  • National Women's Business Council
  • Independent Community Bankers of America
  • National Small Business Association
  • United States Pan-Asian American Chamber of Commerce

The IRS says a leave-donation program can be adopted and administered easily. Employers must follow certain guidelines, but no IRS approval is required and there are no special reporting requirements. This program will extend through the end of 2006. People will have a chance to donate even if they've used their vacation time for this year.

The cash contribution by the employer must be made to a qualified tax-exempt organization, dedicated to Hurricane Katrina relief and paid to the organization by December 31, 2006.

Read about the Leave Donation Program at website of the IRS.

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