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Loeb & Loeb Attys Ask For Clarity On Tax-Free Disaster Relief

By Theresa Schliep · 2020-03-26 16:38:11 -0400

Treasury and the IRS should confirm that President Donald Trump's national emergency declaration for the novel coronavirus pandemic makes relief available that permits tax-free disaster payments, partners from Loeb & Loeb LLP have said in a letter to Treasury.

The agencies should issue guidance clarifying that the emergency declaration triggered the tax relief under Internal Revenue Code Section 139 , which excludes qualified disaster relief payments from gross income, partners Diara M. Holmes and Marcus S. Owens said in the letter Wednesday. Confirmation from the Internal Revenue Service and the U.S. Department of the Treasury would allow employers, including corporations and company-sponsored charities, to provide tax-free payments to workers suffering from the economic fallout from COVID-19, the partners said.

Private foundations run by corporations would especially benefit from confirmation that grant programs for company employees wouldn't constitute self-dealing under IRC Section 4941 , which imposes excise taxes on the prohibited transactions, according to the letter. The partners requested guidance in the form of an agency notice, like the notice issued during the Ebola outbreak announcing the relief, according to the letter.

Holmes and Owens, who said they are tax advisers to numerous organizations in the nonprofit sector, echoed concerns from the nonprofit industry that urged Congress to include robust tax relief for charities in its coronavirus relief package.

--Editing by Neil Cohen.

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