Recent announcements by the IRS will make it easier for employers and employees to provide tax-free support to co-workers, their families, and other individuals who have been affected by Hurricane Sandy. Employers and individuals located in the areas affected by Hurricane Sandy may receive significant relief with respect to certain employment tax withholding and reporting obligations.
In IR-2012-84, the IRS announced that Hurricane Sandy was a ‘qualified disaster’ for purposes of Code section 139. As a result, certain relief payments made by employers to employees are excluded from the employee's gross income and wages.
In IR-2012-88, the IRS stated that employees may donate their vacation, sick, or personal leave in exchange for employer contributions to qualified charities assisting the Hurricane Sandy victims.
Finally, in IR-2012-83, the IRS postponed various employment tax filing and payment deadlines until February 1, 2013. The relief currently applies to affected taxpayers located in Connecticut, New Jersey, and New York. Other locations may be added based on additional damage assessments by the Federal Emergency Management Agency.