Employers can set up a leave-sharing plan that permits employees to deposit leave in a "leave bank" for use by other employees who have been adversely affected by the COVID-19 pandemic. This will have no tax consequences for an employee who deposits leave but the employee will also not be able to claim a deduction for the deposited leave.
The US Internal Revenue Service (IRS) has clarified the above in guidance in the form of frequently asked questions (FAQs). The FAQs refer to Notice 2006-59 that provides guidance on the federal tax consequences of certain leave-sharing plans as well as the requirements of a qualifying leave-sharing plan. The FAQs specifically provide that an employee who deposits leave in the leave-sharing plan need not include the deposited leave in income or wages.
The FAQs indicate a last reviewed or updated date of 3 August 2020.