Is it possible for us to create a charitable trust through which employees can make tax-deductible contributions to assist other employees who suffered losses in the storm?
Yes, it is now possible for an employer to create a “tax efficient” charitable fund (i.e., all contributions are tax-deductible to the donors and all distributions are income tax-free to the recipients) to provide disaster relief assistance to its own employees. After the 9/11 disaster, Congress enacted the Victims of Terrorism Tax Relief Act of 2001, which allowed employers to establish a 501(c)(3) private foundation for the sole purpose of providing disaster relief assistance to the employers employees and their families (an “Employer-Controlled Foundation”). In order to avoid IRS concerns regarding private inurement, there are very specific requirements that must be followed to preserve the tax advantages described above with respect to an Employer-Controlled Foundation. Generally, those requirements are as follows: Most of these requirements exist to ensure that an Employer-Controlled Foundation has a purely charitable purpose, and is not simply an additional employee benefit offer
Related Questions
- Is it possible for us to create a charitable trust through which employees can make tax-deductible contributions to assist other employees who suffered losses in the storm?
- Can I use the qualified charitable distribution to create a trust or gift annuity or another life income agreement from which I would benefit?
- Are contributions to SOS tax-deductible as charitable contributions?
