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Guidance for Federal Agency Special Allowances

On January 8, 2009, the IRS issued a memorandum to a Federal agency, indicating that special allowances paid to Federal agency employees to reimburse certain expenses incurred while evacuating from disaster areas and staying in a safe haven are excludable from employment taxes. This policy applies to all Federal executive agencies.

The memorandum indicates that this policy, which was established by Notice 2006-10 to apply to the Hurricane Katrina core disaster area, is expected to be applied by the IRS to other qualified disasters, as defined in IRC section 139(c).

View the memorandum.

Page Last Reviewed or Updated: 12-Feb-2014