U.S. Customs and Border Protection (CBP) is deploying staff and equipment for search and rescue efforts and to work at local, state, and federal emergency operations centers in Texas in response to Hurricane Harvey.

Hurricane Harvey hit Texas just as the state’s plan to outlaw sanctuary cities is about to go into effect.  Texas also has joined other states in threatening to sue President Donald Trump if he does not phase out DACA starting on September 5^th.

Some of Houston’s more than 500,000 undocumented immigrants reportedly are afraid to seek shelter, fearing deportation.

To encourage undocumented workers in need of assistance to come into shelters, FEMA issued a statement, “Hurricane Harvey Rumor Control,” asking “all persons to follow the guidance of local officials and seek shelter regardless of their immigration status.”

ICE and CBP explained that:

It is not conducting immigration enforcement at relief sites such as shelters or food banks. In the rare instance where local law enforcement informs ICE of a serious criminal alien at a relief site that presents a public safety threat, ICE will make a determination on a case-by-case basis about the appropriate enforcement actions.

In an effort to assuage fears, the Mayor of Houston has offered to personally represent any individual facing deportation after seeking disaster relief.

In the meantime:

• 50 CBP agents are staffing a U.S. Coast Guard Emergency Operations Center in Robstown, Texas

• CBP is providing assistance to border patrol agents in Corpus Christi

• CBP aircraft from Tucson are in Texas, along with 12 aircrew members, 5 support personnel and 3 agents certified in swift-water rescues

• CBP’s Air and Marine Operations sent 4 hoist-capable Blackhawks to Houston to help with rescues

• 50 Tucson area Special Operations Detachments agents are supporting public safety operations

Once the immediate danger subsides, workers will be needed to participate in the billion-dollar rebuilding effort. “Eduardo Canales, director of the South Texas Human Rights Center, said the state is at risk of losing much-needed low-wage workers – cleaners, cooks, carpenters and landscapers – who because of the crackdown may not stick around to help Texas communities recover from the storm.” Even before the hurricane, there was concern that undocumented workers would be leaving the state because of perceived anti-immigrant sentiment.

Beyond the emergency rescue and relief efforts, international trade and travel also has been affected and CBP is coordinating with the U.S. Coast Guard and port authorities to resume operations as soon as possible.

This post was written by Meredith K. Stewart of Jackson Lewis P.C. © 2017

For more legal analysis go to The National Law Review

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“As a firm and as a community, we are deeply saddened by the losses and devastation caused by the recent tornados, especially yesterday’s tornado in Moore, Oklahoma,” said Ira C. Kaplan, Benesch’s Managing Partner. “We want to do our part to help the people in that area as they begin to rebuild in the days ahead.”

Benesch’s Facebook page can be accessed at: www.facebook.com/Benesch.Law

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Employers wishing to provide disaster relief assistance have several tax-relief provisions available to them.

In the wake of Hurricane Sandy and the resulting destruction and devastation to the East Coast, many employers have expressed an interest in providing disaster relief assistance to their affected employees. The following describes the different tax-relief provisions that may be applicable should employers provide such assistance.

Employee Donations of Vacation and Sick Pay

One way that employers can assist affected employees is by enabling employees to donate vacation, sick, or personal leave in exchange for employer contributions to charitable organizations for the relief of disaster victims. Without guidance from the Internal Revenue Service (IRS), these leave-sharing programs would have required the employees receiving any donated leave days to pay income andFederal Insurance Contributions Act (FICA) taxes on the leave-day income. Morgan Lewis, however, assisted the American Payroll Association (APA) in obtaining payroll reduction donation relief from the IRS for Hurricane Sandy, which the IRS released on November 6, 2012, in Notice 2012-69.^[1] The APA has been successful in obtaining such guidance twice previously, after both the September 11 attacks and Hurricane Katrina. When the IRS adopted these special relief provisions for 15-month periods after 9/11 and after Hurricane Katrina, some companies estimated that the provisions facilitated millions of dollars of additional donations.

The new IRS guidance permits employers to adopt leave-based donation programs under which the donating employee is not subject to income or FICA taxes on the donated leave, and the payments from charitable organizations to the recipients are also exempt from income and FICA taxes.

The APA’s request also asked the IRS to eliminate the requirement that employees designate recipient charitable organizations and allow employees to assign their leave days to disaster relief programs that employers can set up on their own (using the rules in the Internal Revenue Code discussed below, which permit employers to provide certain tax-exempt disaster relief payments to employees affected by major disasters.) The APA also proposed that the IRS might allow employees simply to assign designated amounts of their wages, rather than leave days, for Hurricane Sandy relief. We understand that the IRS may rule on these additional requests in subsequent guidance.

Qualified Disaster Relief Payments to Employees

In addition to encouraging employee donations of vacation and sick pay, employers wishing to provide assistance may utilize Section 139 of the Internal Revenue Code, which establishes a federal income and payroll tax exclusion for payments received by an individual as a qualified disaster relief payment. A “qualified disaster” includes any federally declared disaster, as well as any disaster that is determined by the Secretary of the U.S. Department of the Treasury to be catastrophic in nature. The Federal Emergency Management Agency (FEMA)has declared counties in the states of New York, New Jersey, Rhode Island, and Connecticut to be qualified disaster areas. In addition, the IRS has issued guidance confirming that Hurricane Sandy is designated as a qualified disaster for federal tax purposes, regardless of whether those affected are located in a federally declared disaster area.^[2]

Employers who wish to provide payments to their affected employees should take steps to ensure that such payments meet the limitations of Section 139 and therefore will be treated as qualified disaster relief payments. Those steps include the following:

• Make payments to employees only for reasonable and necessary personal, family, living, or funeral expenses or reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or repair or replacement of its contents.
• Do not make payments for any expenses compensated for by insurance or otherwise.
• Confirm that any expenses are attributable to the qualified disaster.
• While the employer does not have to require employees to account for actual expenses, the employer must reasonably expect the payments to be commensurate with expenses incurred. Consider having a written policy explaining how payments are intended to approximate actual losses.

Employers should also do the following:

• Review 401(k) and retirement plan terms to determine if the payments must be treated as compensation under the plan documents.
• Consider any state law implications.

Payments under Section 139 are an immediate and direct way employers can provide assistance to employees affected by Hurricane Sandy with little administrative cost. There are advantages, however, to providing such assistance through an employer-sponsored public charity.

Helping Through a Charitable Organization

Employer-sponsored public charities can provide a broader range of assistance to employees because payments from these organizations are not subject to the limits of Section 139 discussed above. Further, a charitable organization can respond to any type of disaster or employee hardship situation, not just “qualified disasters,” as long as the related employer does not exercise excessive control over the charitable organization.

There are three principal requirements for providing employee assistance through an employer-sponsored public charity:

1. The class of beneficiaries must be indefinite. The relief program generally must be available to employees affected by current and future disasters and hardships.
2. The recipients must be selected based on an objective determination of need or distress. The program must have some guidelines for determining when to provide assistance and must undertake some due diligence to ensure that the recipients are “needy or distressed.” Financial assistance cannot be provided to employees simply because they are victims of a disaster. Typically, public charities providing employee disaster or hardship relief adopt guidelines for awarding assistance and require an application form to be completed by the individual seeking assistance. The application form can then be used to make a determination that the applicant meets the “needy or distressed” requirement.
3. The recipients must be selected by an independent selection committee. This is a critical requirement and will be met if a majority of the selection committee consists of members who are “not in a position to exercise substantial influence over the affairs of the employer.” As a practical matter, this means that the majority of the selection committee cannot consist of members of the employer’s senior management. Many organizations have retired employees or persons from the human resources department serve on the selection committee.

These employer-sponsored public charities also provide a concrete way for company employees to assist other company employees by donating to the organization. Donations from both the employer and other employees are generally tax-deductible charitable contributions, and assistance payments received by employees are excludable from gross income. Providing assistance through these charitable organizations can therefore offer increased flexibility and tax benefits.

Unlike employer-sponsored public charities, which can provide assistance under any type of disaster or employee hardship situation, employer-sponsored private foundations may only provide assistance to employees or family members affected by a qualified disaster as defined in Section 139. Employer-sponsored private foundations also must be sure to meet the safeguards listed above to ensure that such assistance is serving charitable purposes rather than the business purposes of the employer.

_{[1]. Read the IRS notice here.}

_{[2]. Read the IRS announcement here.}

Copyright © 2012 by Morgan, Lewis & Bockius LLP

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