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remain in effect until canceled or superseded.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