Since the Russian Federation invasion of Ukraine on February 24, 2022, many employers have adopted or are considering adopting employer leave-based donation programs to aid citizens and residents of Ukraine, persons working, traveling, or currently present in Ukraine, or refugees from Ukraine. On May 19, 2022, the IRS issued Notice 2022-28, which provides important guidance on the federal income and employment tax treatment of cash payments made by employers to charitable organizations under these programs. The guidance is similar to the guidance in Notice 2001-69, as modified and superseded by Notice 2003-2, on charitable donations made after the September 11, 2001 terrorist attacks. Under employer leave-based donation programs, employees can elect to forgo vacation, sick, or personal leave in exchange for their employers making cash payments to charitable organizations to aid the victims of the invasion. The organizations must qualify as charitable organizations under Section 170(c) of the Internal Revenue Code. Payments made before January 1, 2023 will not be treated as gross income, wages, or other compensation to the employees. Similarly, employees electing or who have the opportunity to elect to forgo the leave that funds the payments will not be treated as in constructive receipt of taxable income. Employers should not include the payments in Boxes 1, 3, or 5 of the electing...
Are You an “Applicable Large Employer” Required to “Play or Pay” Under the ACA’s Employer Mandate and the IRS’ Proposed Shared Responsibility Regulations?
In addition to the controversial and much-litigated Individual Mandate, the Patient Protection and Affordable Care Act of 2010 (“ACA”) includes an equally controversial (though not quite as heavily litigated) “Employer Mandate.” The Employer Mandate can be found in new section 4980H of the Internal Revenue Code. Effective for plan years beginning in 2014, “applicable large employers” will face a choice. They must either (i) offer substantially all (at least 95%) of their full-time employees (employees working on average 30 or more hours per week) and their non-spousal dependants “affordable” health insurance providing “minimum essential coverage” and “minimum [actuarial] value” or face potential penalties. If such coverage is not offered penalties apply if any of their full-time employees qualify under the ACA for a premium tax credit or cost-sharing reduction in connection with the purchase of health insurance.