updated 9/8/2005 8:55:23 PM ET 2005-09-09T00:55:23

The Internal Revenue Service on Thursday announced a new program to encourage workers to give up unused vacation time and sick days that could be turned into charitable contributions to aid the victims of Hurricane Katrina.

Employers would convert the donated time into cash contributions to charities and workers would be able to deduct the amount donated from their federal tax return, officials said.

A similar program was put into effect after the Sept. 11, 2001, terrorist attacks, but it received only a limited response. Treasury Secretary John Snow and IRS Commissioner Mark Everson told reporters at a news conference Thursday that the government planned a much greater effort to publicize the new program and expected a much larger response this time.

"We are seeing a tremendous outpouring of the American spirit," Snow said. "That is our indication that this program will be utilized and have a desirable effect."

Officials refused to provide any estimates of lost revenue to the government from the utilization of this new deduction.

For workers to be able to take advantage of the program, their employers will have to set up a leave-based donation program under guidelines that will be published by the IRS. The program will cover unused vacation time, unused sick leave and unused personal leave.

Even workers who do not itemize deductions on their tax returns, which covers about two-thirds of all filers, will be able to participate in this program, the IRS said.

The IRS also announced Thursday that it was extending a number of tax deadlines for people living in areas affected by Katrina until Jan. 3. Previously, the IRS had extended these tax deadlines including extending until Oct. 31 the Sept. 15 deadline for individuals to make quarterly estimated payments.

The Jan. 3 extension will cover people living in Louisiana, Mississippi, Alabama and three counties in Florida.

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