IRS Declares Ebola Outbreak Qualified Disaster for tax Purposes

The ongoing Ebola outbreak in West Africa has resulted in an outpouring of support worldwide, from both public and private sources. This has notably taken the form of medical aid, but includes financial aid as well. The latter category has not escaped the attention of the Internal Revenue Service, which issued tax guidance relating to the Ebola outbreak on October 29, 2014.[1]

In the guidance, the IRS states that the outbreak is now considered a qualified disaster for the purposes of section 139 of the Internal Revenue Code. The countries included in the disaster area are Guinea, Liberia, and Sierra Leone. This means that U.S. employees living in these countries may exclude disaster relief payments from their tax returns, so long as the U.S. employer was responsible for those payments.

The payments will not be included in gross income to the U.S. employees under section 139(a). These amounts can cover personal, family, and living expenses that would otherwise not be covered by insurance. Further, these payments can originate from an employer-sponsored fund, such as a private foundation or public charity. This IRS declaration means that employers with employees living in the affected area should consider utilizing any existing employee hardship funds, or setting up such funds, if they do not.

This information should not be relied on as tax or legal advice. You should seek your own counsel for such advice.

[1] Internal Revenue Service. Notice 2014-65. “Ebola Virus Disease Outbreak Occurring in Guinea, Liberia, and Sierra Leone

Designated as a Qualified Disaster under § 139 of the Internal Revenue Code.” Retrieved from http://www.irs.gov/pub/irs-drop/n-14-65.pdf.