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COVID relief for dependent care FSAs clarified

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Tax Hot Topics newsletter The IRS has released Information Letter 2020-27 to clarify the COVID-19 relief provided to dependent care Flexible Spending Accounts (referred to as dependent care assistance programs) under Notice 2020-29. Notice 2020-29 gave employers the option to allow employees to change their elections under a cafeteria plan with respect to dependent care assistance programs, on a prospective basis, in response to COVID-19. The information letter confirms that unused amounts in a dependent care assistance program (inclusive of those contributions made by an employee before a mid-year election change under Notice 2020-29) cannot be returned other than as reimbursements for dependent care expenses.

Contacts:
Jeff Martin
Partner
Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director
Washington National Tax Office
T +1 202 521 1554

Kristen Smith
Director
Atlanta Office
T +1 404 475 0120

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