03-01

Procurement Information Circular


January 17, 2003

CANCELLATION OF PIC 02-06

 

PURPOSE:  To cancel PIC 02-06, Donation of Contractor Employee Unused Leave.

 

BACKGROUND:  PIC 02-06 was issued on February 25, 2002, 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.  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.  NASA concluded that such payments for vacation and personal leave, but not for sick leave, represented an allowable compensation cost under FAR 31.205-6, “Compensation for Personal Services,” rather than an unallowable contribution under FAR 31.205-8, “Contributions or Donations.”  The issue was to be revisited when the IRS announced how it will treat employee donations of leave made on or after January 1, 2003. 

 

GUIDANCE:  The IRS recently advised that it will not extend Notice 2001-69.  As a result, effective January 1, 2003, payments for contractor employee leave donations to charitable organizations are no longer allowable.  Accordingly, the guidance provided in PIC 02-06 has expired.

 

CANCELLATION:  This PIC cancels PIC 02-06.

 

EFFECTIVE DATE:  This PIC is effective as dated and shall remain in effect until canceled or superseded.

 

HEADQUARTERS CONTACT:  Lou Becker, Code HK, (202) 358-4593, email: lbecker@hq.nasa.gov. 

 

 

R. Scott Thompson

Director, Contract Management Division