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State of California Franchise Tax Board

Controller Westly Announces State Tax Benefits for Businesses and Employees Donating to Hurricane Relief

Innovative Program Allows Workers to Contribute Leave Time

State Controller and Franchise Tax Board (FTB) Chair Steve Westly today announced state tax benefits for businesses and employees who aid Hurricane Katrina relief efforts by donating the cash value of employee leave time. The program allows workers to donate the equivalent of days or even weeks of pay without affecting their income.

"Millions of vacation and sick leave days go unused every year. Under this program, those unused days can provide the food, clothing, and shelter that the victims of Hurricane Katrina desperately need,“ Controller Westly said. ”I'm proud that government is providing an innovative program to help people help each other."

"The people of our state have been extremely generous in reaching out to victims of Hurricane Katrina," said FTB member John Chiang, who is also chair of the State Board of Equalization. "By conforming to IRS regulations, California makes it easier to continue this effort. Instead of the taxpayer writing a check directly, he or she can donate vacation, sick leave, or personal leave credits before January 1, 2007, to a particular organization, and the employer would make the payment."

Under the program, workers can choose to contribute vacation, sick leave or personal leave time to hurricane relief. Their employers in turn will donate the cash value of that time. Businesses will be able to deduct the amount of their cash payments on their state tax filings.

Without this action by the FTB, employees would have had to declare the value of any leave time they donated as taxable income.

The federal government recently enacted similar tax benefits, triggering the FTB to conform its policies to those of the IRS.

For the latest tax information related to Hurricane Katrina, visit the FTB Website at and the IRS' Website at

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