Corporation May Not Deduct Charitable Matching Funds Linked to Employee PAC Contributions
Date: October 3, 2016
A recent IRS Private Letter Ruling (PLR 201616002) concluded that a corporation could not deduct as a business expense under IRC Section 162 the matching funds it contributed to charities as a part of a corporate PAC charity match program. The IRS found that the employee contribution to the PAC was a prerequisite for the corporation’s matching contribution, thus making the PAC contribution and the corporation’s charitable matching contribution inextricably linked. As a result, the IRS was of the view that the matching contributions were in connection with political campaigns and could not be deducted as an ordinary and necessary business expense.