Arlington, V.A. (Jan. 22, 2019) –The Professional Services Council (PSC) asked the Internal Revenue Service (IRS) to issue urgent guidance offering tax relief for federal contractor employees who have received donated leave time from peers during the current partial government shutdown.
| PSC Asks IRS To Offer Tax Relief of Donated Leave Time
for Contractors Impacted by the Government Shutdown
As the shutdown is now the longest in U.S. history, large numbers of federal government employees and employees of government contractors are either working without pay or furloughed without pay, creating immense financial hardships. Fellow contractor employees are donating their vacation, sick, or personal leave directly to fellow employees who have exhausted their accrued personal leave, or exchange cash payments that the employer makes to qualified charitable organizations that would provide relief. Under general tax rules, an employee who elects to forgo vacation, sick or personal leave is deemed to be in constructive receipt of the related gross taxable wages and subject to tax withholding. The IRS has made exceptions for this in the past, and PSC is requesting that an exception also be made now.
“We respectfully request that, at a minimum, the IRS issue expedited guidance to allow employers to establish leave sharing programs and charitable donation programs whereby employees who elect to donate leave for the benefit of fellow employees suffering financial distress from this unprecedented and extraordinary partial U.S. government shutdown will not be required to include the donated leave value in the tax of recipient employees,” PSC Executive Vice President and Counsel Alan Chvotkin said in PSC’s Jan. 22 letter to the IRS.
PSC, which represents government technology and professional services federal contractors, is also asking the IRS for equal treatment to government employees.
“As you are aware, federal employees have access to voluntary leave bank and voluntary leave transfer programs, as established by each agency under guidance from the Office of Personnel Management,” Chvotkin stated in the letter. “We are asking that contractors and their employees be provided the same flexibilities when dealing with the record-setting partial government shutdown.”
Director, Media Relations
About PSC: PSC is the voice of the government technology and professional services industry. PSC’s nearly 400 member companies represent small, medium and large businesses that provide federal agencies with services of all kinds, including information technology, engineering, logistics, facilities management, operations and maintenance, consulting, international development, scientific, social, environmental services, and more. Together, the trade association’s members employ hundreds of thousands of Americans in all 50 states. Follow PSC on Twitter @PSCSpeaks. To learn more, visit www.pscouncil.org.