Providence Partner Lori Basilico, a member of the Locke Lord’s Employee Benefits and Executive Compensation Practice Group, was quoted in an article by the Society for Human Resource Management on how employers can provide tax-favored financial assistance to employees directly or indirectly affected by the COVID-19 pandemic. Basilico notes that wage replacement, as well as paid sick leave and payments or expenses that are compensated by insurance or other sources, are not covered under Section 139 of the Internal Revenue Code. She also explained that "under Internal Revenue Service guidance (Revenue Ruling 2003-12), because of the extraordinary circumstances surrounding a qualified disaster, individuals will not be required to account for actual expenses in order to qualify for the Code Section 139 income exclusion, provided that the amount of the payments can be reasonably expected to be commensurate with the expenses incurred."
Basilico further noted that although there is no requirement for the employer to have a written qualified disaster relief payment plan, "employers should consider establishing procedures to inform employees of the reimbursement process and for collecting and reviewing requests for relief."
For additional insight, read Basilico’s related blog post.
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