Varnum (Michigan): Tax-Free Disaster Relief Payments Permissible Under Section 139

A new section 139 was added to the federal tax code in the wake of 9/11 in order to allow businesses, nonprofits, and state and local governments to make disaster relief payments to individuals who have been affected by a disaster. The disaster relief payments are generally tax free to the individuals who receive them. If made by an employer to an employee, payments would be taxable compensation. Under section 139, however, they can be tax free to the employee and still deductible by the employer. MORE.

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