Code Section 139
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Employers Can Provide Tax-Free Disaster Assistance to Employees

by Jonathan J. Boyles, Robert C. Louthian, III and Ruth Wimer

Section 139 of the Internal Revenue Code (Code) allows an employer to provide tax-free disaster relief to its employees, and the employer may take a tax deduction for these payments, if the payments constitute qualified disaster relief payments.  Given the benefits of tax-free status for qualified disaster relief payments, employers that choose to provide such payments should consider adopting an administrative system that validates such payments meet Code Section 139 requirements.

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