Canceled by PIC 03-01
PURPOSE: To provide guidance on categorizing payments for contractor employee leave donations to charitable organizations, such as those providing assistance to victims of the September 11, 2001, disasters, as allowable compensation costs in accordance with FAR 31.205-6.
BACKGROUND: Since September 11, 2001, there have been instances where contractor employees have wanted to donate leave to charitable organizations such as those providing assistance to victims of that days disasters. A number of contractors have implemented, or are considering implementing, policies to permit their employees to donate leave to charitable organizations, such as those providing assistance to victims of the September 11, 2001, disasters. The Internal Revenue Service (IRS) issued IRS Notice 2001-69 on November 13, 2001, to facilitate such donations by making it clear that employee donations of leave would not constitute taxable income for the employee, and that the IRS would permit employers to treat these employee donations as either ordinary and necessary business expenses or charitable contributions.
GUIDANCE: After careful examination of this issue, NASA has concluded that such payments for vacation and personal leave, but not for sick leave, represent an allowable compensation cost under Federal Acquisition Regulation (FAR) 31.205-6, “Compensation for Personal Services,” rather than an unallowable contribution under FAR 31.205-8, “Contributions or Donations.” We will permit this treatment for payments made before January 1, 2003, providing the donations do not exceed the IRS cap for charitable contributions and the donations meet the IRS guidelines. We will revisit the issue when the IRS announces how it will treat employee donations of leave made on or after January 1, 2003.
EFFECTIVE DATE: This PIC is effective as of September 11, 2001, and shall remain in effective until superseded or canceled.
HEADQUARTERS CONTACT: Lou Becker, Code HK, (202) 358-4593, email: firstname.lastname@example.org.
R. Scott Thompson
Director, Contract Management Division