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IRS Describes Tax Treatment of Employer Payments to Employees Affected by Flood (PDF)
Internal Revenue Service [IRS] 
[Official Guidance] Dec. 20, 2002
Excerpt: An area within state ST was affected by a flood that was a Presidentially declared disaster as defined in § 1033(h)(3) of the Internal Revenue Code.... Employer R makes grants to its employees who are affected by the flood ... The grants will pay or reimburse employees for medical, temporary housing, and transportation expenses they incur as a result of the flood that are not compensated for by insurance or otherwise.
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