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May 13, 2020

Trone Gets Results: IRS Issues New Decision Allowing Taxpayers to Save Additional Money Amid COVID-19 Pandemic


Contact: Hannah Muldavin,

Trone Gets Results: IRS Issues New Decision Allowing Taxpayers to Save Additional Money Amid COVID-19 Pandemic

Trone led the bipartisan effort to push the IRS to make the change

GAITHERSBURG, MD – After weeks of pressure from Congressman David Trone and a bipartisan coalition of Members of Congress, the IRS issued a decision that will allow American families to save money on health care, medical expenses, and dependent care amid the COVID-19 pandemic. This decision allows Americans to make mid-year changes for health flexible spending arrangements (FSAs) and dependent care assistance programs and authorizes unused funds to be rolled over to the following year.

The Internal Revenue Service (IRS) announced the changes following a request by Trone and 12 other Members of Congress on April 7th to Treasury Secretary Steven Mnuchin and IRS Chief Counsel Michael Desmond. Trone spearheaded the initiative after hearing directly from constituents impacted by the lack of flexibility in their accounts amid the coronavirus outbreak. Following the letter, he spoke with officials at the IRS about addressing this change.

You can see full guidance from the IRS here.

“As workers across the country make drastic adjustments to their work and family schedules because of the coronavirus, I heard from constituents that they needed the flexibility to make adjustments to their employer-sponsored benefit plans,” said Congressman Trone. “No family could have predicted the changes we’ve seen across the nation in the past few months, and this initiative ensures we put workers and families first as they work to make ends meet. The success of this bipartisan initiative is a win for families and workers who are doing their best to weather this unprecedented crisis.”

Millions of Americans set aside pre-tax dollars into these accounts to help them save money on child care, health care, and other expenses. Money set aside in these programs that goes unused is forfeited at the end of the year. Child care centers across the country were forced to close, meaning Americans risk forfeiting the money they would have spent on these dependent care programs.

Rep. David Trone (D-MD) was joined by Reps. Linda Sanchez (D-CA), Rick Crawford (R-AR), Abigail Spanberger (D-VA), Jim Cooper (D-TN), Ted Deutch (D-FL), Marc Veasey (D-TX), Susan Wild (D-PA), Eleanor Holmes Norton (D-DC), Xochitl Torres Small (D-NM), Brian Fitzpatrick (R-PA), John B. Larson (D-CT), and Angie Craig (D-MN).

The text of the letter can be found below:

Dear Secretary Mnuchin and Chief Counsel Desmond:

Millions of Americans choose to participate in cafeteria plans offered by their employers. Under cafeteria plans, workers choose from several different benefits, including health savings accounts, flexible spending accounts, and disability insurance, among other options. Cafeteria plans are flexible enough to allow each worker to choose the right benefit package for their unique familial and financial situations.

One type of benefit many employers offer through a cafeteria plan is the Dependent Care Flexible Spending Account (DCFSA). These pre-tax benefit accounts allow families to set aside money in order to help finance dependent care options such as before-school and after-school programs, child and adult day care, and preschool. DCFSAs help Americans save money on dependent care programs and reduce a family’s overall tax burden. However, in general, the decision of how much money to set aside for the year cannot be changed after the year begins, and funds must be used by the end of the year or risk forfeiture.

Due to the COVID-19 pandemic, Governors and other state and local officials have mandated the closure of schools and dependent care programs like daycares. As a result, millions of Americans will be left with money in these flexible spending accounts at the end of this year that they otherwise would have spent. On the other hand, some families may face increased childcare costs due to their unique employment situations and would benefit from increased contributions to their DCFSA.

The COVID-19 pandemic isn’t just affecting DCFSAs. From health savings accounts to insurance options, Americans would benefit from additional flexibility with respect to their individual cafeteria plans elections. Some families would benefit from increased contributions into a health savings account due to unexpected health costs due to the pandemic. Other families may want to reduce their contributions to increase their take-home pay. As policymakers, we ought to equip all families with the tools to make it through this economic crisis and ease this financial pressure.

As such we ask you to quickly issue guidance allowing Americans who participate in cafeteria plans to make mid-year election changes during 2020 and offering a one-time carryover of cafeteria plan benefits from 2020 to 2021. If you do not have sufficient regulatory authority to issue this guidance, we request your assistance in developing the necessary statutory changes to allow this important policy change.

Thank you for your urgent consideration of this request.