Ten Questions on COVID-19 and Charitable Giving: Certified Public Accountant

[ ]IRC section 139 allows employers to aid their employees, and others, on a tax-free basis Answer: IRC section 139 says that a qualified disaster relief payment includes any amount paid to or for the benefit of an individual: 1) To reimburse or pay reasonable and necessary personal, living, or funeral expenses as a result of a qualified disaster;2) To reimburse or pay reasonable expenses incurred for the repair or rehabilitation of a personal residence or repair of its contents attributable to a qualified disaster;3) By a person engaged in the furnishing or sale of transportation as a common carrier by reason of death or personal injuries resulting from a qualified disaster;or 4) If such amount is paid by a federal, state, or local government, or agency or instrumentality thereof, in connection with a qualified disaster to promote general welfare In general, employer-sponsored public charities are entities that meet the requirements for tax exemption under IRC section 501(c)(3) [ ]the donations to the charity will be deductible pursuant to the charitable deduction rules, and the donations received by the employees will be excluded from gross income According to the IRS, funds can be disbursed to employees based on the following criteria: * The fund serves the single identified purpose of providing relief from a qualified disaster * The fund serves a charitable class * The recipients are chosen using either an independent selection committee or adequate substitute procedures to ensure that any benefit to the employer is "incidental and tenuous " * No payment is made to or for the benefit of any director, officer, or trustee of the sponsoring community foundation or charity, or member of the selection committee * The fund maintains adequate records to demonstrate the recipients' need