IRS Announces Tax Guidance Related to Ebola Outbreak in Guinea, Liberia and Sierra Leone

IR-2014-102, Oct. 29, 2014

WASHINGTON — The Internal Revenue Service today issued two items of guidance in response to the need for charitable and other relief due to the Ebola outbreak in Guinea, Liberia and Sierra Leone. One provides special relief intended to support leave-based donation programs to aid victims who have suffered from the Ebola outbreak in those countries. The other designates the Ebola outbreak in those countries as a qualified disaster for federal tax purposes.

Under the leave-based donation guidance, employees may donate their vacation, sick or personal leave in exchange for employer cash payments made to qualified tax-exempt organizations providing relief for the victims of the Ebola outbreak in Guinea, Liberia or Sierra Leone. Employees can forgo leave in exchange for employer cash payments made before Jan. 1, 2016. Under this special relief, the donated leave will not be included in the income or wages of the employees. Employers will be permitted to deduct the amount of the cash payment.

For example, if an American company has such a program and makes a cash donation of the value of an employee’s donated leave before January 1, 2016, to an organization that is providing medical services and supplies for the relief of victims of the Ebola outbreak in Guinea, Liberia, or Sierra Leone, the IRS will not consider the amount of that payment as gross income or wages of the employee.  Additionally, the IRS will not assert that the U.S. company can only deduct such cash payments under Internal Revenue Code section 170.

The IRS reminds taxpayers there are some simple steps they can take to ensure that their contributions go to qualified charities, and more information is available at IRS.gov.

The qualified-disaster guidance allows recipients of qualified relief payments related to the Ebola outbreak in Guinea, Liberia and Sierra Leone to exclude those payments from income on their tax returns. Under today’s guidance payments generally include amounts to cover necessary personal, family, living or other qualified expenses that were not covered by insurance.

For example, if an employee living in Guinea receives reimbursement from an employer-sponsored charitable organization for medical expenses incurred by the employee as a result of the Ebola outbreak in Guinea, such reimbursement will not be included in the employee’s gross income for U.S. federal income tax purposes.

Similarly, if an employee of an American company is relocated within Liberia under a quarantine order due to the Ebola outbreak in Liberia, and the American company pays for the employee’s transportation, rent and living expenses related to the quarantine order, such payments will not be included in the employee’s gross income for U.S. federal income tax purposes.

Today’s announcement of qualified relief follows similar steps taken in other qualified disasters, such as the Japan earthquake and tsunami and the Haiti earthquake. The announcement about leave-based donation programs is similar to programs available in the aftermath of Hurricane Sandy and Hurricane Katrina.

http://www.irs.gov/uac/Newsroom/IRS-Announces-Tax-Guidance-Related-to-Ebola-Outbreak-in-Guinea,-Liberia-and-Sierra-Leone

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Foreign Reporting Requirements: Could they apply to you?

Foreign Reporting Requirements:  Could they apply to you?

by Karen Lamardo, CPA

When considering  foreign reporting requirements, many people bypass the topic, believing that it doesn’t  apply to them.  However, it’s a good idea to take the time to review what may be considered a foreign asset subject to mandatory informational reporting.

  • Inheriting property and or funds from a foreign person;
  • Receiving a gift from a foreign person or a distribution from a foreign trust;
  • Having an interest in a foreign corporation, partnership or entity; and
  • Establishing a foreign bank account.

Recently, the IRS has been focusing its efforts on ensuring the reporting of the existence of these assets and income earned abroad.  The penalties for failing to file are stiff and may include criminal penalties.

In an effort to assist those that have inadvertently failed to properly report certain accounts, the IRS has implemented an Offshore Voluntary Disclosure Program (OVDP).  For those individuals who qualify, this program is intended to bring non-compliant individuals into compliance and provide them with a certain degree of amnesty.

Since there are various types of foreign financial interests and reporting requirements, you should speak with your tax advisor about your specific situation.

The IRS has put out guidance for the relevant reporting threshold when it comes to Form 8938, Statement of Specified Foreign Financial Assets and FBAR, FinCEN 114.  It can be found at:

http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements

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NYS announced mandatory electronic withholding tax filings (NYS-45 and NYS-1)
NYS Posted this to their website:
Electronic filing is mandatory for withholding tax filings (NYS-45 and NYS-1)

For withholding tax returns due on or after April 30, 2015, you must electronically file and pay your withholding tax returns electronically.  Filers of paper returns may be subject to penalties and delays in processing.

The department offers three methods for electronically filing withholding tax returns:

  • Tax Department Web File – You can make withholding payments, file withholding tax returns, and report wage and UI (unemployment insurance) information.  Learn more about Web File.
  • Tax Department Web upload – The fastest and easiest way to make withholding payments, file returns, and report withholding tax, wage, and UI information.  Learn more about Web upload.
  • FSET compatible software – Some commercially available software allows you to use the FSET (Federal/State Employment Taxes) program to file withholding returns and report wage and UI information.  See which software programs are compatible with FSET.

Additional resources

http://www.tax.ny.gov/bus/wt/wt_efile_mandate.htm

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