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  1. #1
    Join Date
    Dec 2014
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    Dependent Care Flexible Spending Account

    What is the name of your state (only U.S. law)? Colorado

    I missed the deadline to claim our reimbursement for the money we put into our "dependent care flexible account" (huge mistake, I know!). The claim is for the $5,000 maximum (07/13-06/14) and the deadline to file the claim was 11/30/14. I filed an appeal on 12/02 to the company that disburses the funds (ASI Flex) and they denied our request. They said that they need to abide by the deadlines set by my employer and to file an appeal with them by 02/01/15.

    So, I called employer and talked to a benefits counselor and she gave me the "there's nothing we can do" message. She said that I can file an appeal but that they "rarely" grant them because they have to abide to IRS regulations.

    I have read online that the IRS regulations are related to "if you don't use it, you loose it." We did use the $5,000 but failed to claim it within the grace period. I understand that the deadlines for filing are set by the employer. So, the IRS "loose it" regulation does not apply to missing the deadline to file the claim, instead it is the employers deadline?

    A couple of other questions to prepare how best to present my appeal to the benefits department:

    1) Do you have any suggestions as to how to best present my case (IRS documentation, legal precedents)? What resources can a cite/download/print to substantiate the IRS's position on what they regulate vs. what is at the discretion of the company? How should I proceed?

    2) If the appeal is not granted, is there any way to claim it as a loss in our taxes?

    3) Is this a case ($5,000) worth consulting with a tax/IRS legal counsel?


  2. #2
    Join Date
    Feb 2007
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    21,233
    The use or lose is when you remove it from the account not when you made the covered expenditure. It's up to your employer to set the plan deadlines which could allow filling claims until next March. They don't have to make an exception but frankly the "IRS regulations" don't appear to have anything to do with it.

    You can't deduct anything for unspent FSA deductions. Of course if you don't get reimbursed for the child care expenses you intended to use this money for, you can see if you qualify form the child/dependent care tax credit.


  3. #3
    Join Date
    Nov 2001
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    Massachusetts
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    While the deadlines are set by the employer, once they are set they are set in stone. They MUST comply with the terms of the plan document. The deadlines are not flexible and the employer cannot waive them unilaterally.

    What was your reason for missing the deadline? I'm asking for a reason.


    Two things I am tired of typing: 1.) A wrongful termination does not mean that you were fired for something you didn't do; it means that you were fired for a reason prohibited by law. 2.) The above answer, whatever it is, assumes that no legally binding contract or CBA expressly says otherwise. If it does, the terms of the contract apply.
  4. #4
    Join Date
    Dec 2014
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    I was on vacation in California for Thanksgiving and left my calendar that had the dates written there. I know I could have submitted earlier but forgot. So, an oversight.

    I know deadlines are in place for a reason...but mistakes are made, and someone banks the money that was taken out of my paycheck. I am hoping to provide an argument that the claim submission deadline is set by the company and not the IRS. But that might not be correct?

    Thanks for your reply. Much appreciated.


  5. #5
    Join Date
    Dec 2014
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    Quote Originally Posted by FlyingRon View Post
    The use or lose is when you remove it from the account not when you made the covered expenditure. It's up to your employer to set the plan deadlines which could allow filling claims until next March. They don't have to make an exception but frankly the "IRS regulations" don't appear to have anything to do with it.

    You can't deduct anything for unspent FSA deductions. Of course if you don't get reimbursed for the child care expenses you intended to use this money for, you can see if you qualify form the child/dependent care tax credit.
    Thank you. Your response is certainly helpful as I try to put together my appeal. Any documentation (IRS or other sources) that you can point me to so I can attach it to my claim is much appreciated.

    I will talk to my tax advisor about seeing if we qualify for the child/dependent care tax credit. I recall she said we don't...but maybe this next year we will. Thanks!


  6. #6
    Join Date
    May 2004
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    Quote Originally Posted by cbg View Post
    While the deadlines are set by the employer, once they are set they are set in stone. They MUST comply with the terms of the plan document. The deadlines are not flexible and the employer cannot waive them unilaterally.

    What was your reason for missing the deadline? I'm asking for a reason.
    I don't disagree...but I do have a problem with an employer that sets a deadline that is before the end of the year. In that instance, an employer may have covered expenditures that occur after that deadline, making it impossible for them to utilize money that is in their FSA. If the employer makes December part of the next fiscal year for the purposes of the FSA, then I would have less of a problem with it.


  7. #7
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    California
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    Quote Originally Posted by LdiJ View Post
    In that instance, an employer may have covered expenditures that occur after that deadline, making it impossible for them to utilize money that is in their FSA.
    For the OP, the period in question ended in June of 2014. Does that change your view?


  8. #8
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    Quote Originally Posted by Zigner View Post
    For the OP, the period in question ended in June of 2014. Does that change your view?
    Yes, that changes my view. I obviously missed that information. Obviously the FSA operates on a fiscal year.


  9. #9
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    And quite frankly, from the end of June till the end of November is rather a generous period.

    I don't think you're quite getting what I'm saying. The IRS allows the employer to decide, at the time the plan is first put together, what to use for a deadline date. But once that date is determined, it is written into the plan documents, and as of that date the IRS does NOT allow the employer to waive it. It's not a guideline - it's a rule, and if they violate it, they'd better have a very, very, very good reason why. "I forgot" is not going to be an acceptable reason. "I was on work related business in the Amazon jungle from May through December and had no contact with the world at large" would *probably* be an acceptable reason.

    When the plan is audited (and it's not IF the plan is audited, it's WHEN the plan is audited - ALL plans are audited regularly) the employer could be fined or even have the right to offer an FSA withdrawn if they are violating the plan.

    I think you are operating on the assumption that because the IRS does not mandate the deadline date (i.e. all plan years that end on June 30 must have a deadline of X, etc.) and allows the employer the choice of dates, that it means the IRS doesn't care about deadlines and the employer can do whatever they want about when the deadline is set. That is not the case. The employer gets ONE opportunity to say what the deadline will be, but once they make that choice, that choice lasts forever - or at least until they re-write the plan documents. The IRS cares very, very much about employers following their own rules.


    Two things I am tired of typing: 1.) A wrongful termination does not mean that you were fired for something you didn't do; it means that you were fired for a reason prohibited by law. 2.) The above answer, whatever it is, assumes that no legally binding contract or CBA expressly says otherwise. If it does, the terms of the contract apply.
  10. #10
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    Dec 2014
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    Thank you for taking the time to explain it to me more extensively. I believe I better understand what you are saying. Of course, I was hoping for a different answer. Knowing that there are consequences to the employer for not sticking to the deadline makes me feel that it is not something arbitrary that they can easily override. Again, thank you.


  11. #11
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    These deadlines are very, very far from being arbitrary and cannot be overridden lightly. They should not be overridden at all without a very compelling reason, and even then the employer should look twice, or even three times, before agreeing. Simple oversights are not compelling.

    FSA's are held to a VERY strict form. What is an acceptable charge, who the charges can be for, how much money is the maximum, the format under which a claim must be submitted, all are set by law. That the employer is permitted to make a couple of administrative decisions at the time the plan is created does not make those decisions any less binding.

    I know it's not the answer you wanted to hear and I'm sorry about that, but this is not something the employer can play games with. There ARE consequences, and pretty severe ones, if the IRS does not find the reason for a waiver compelling enough.

    I'm not saying don't appeal; it never hurts to try. I am saying do not be surprised if your appeal is denied.


    Two things I am tired of typing: 1.) A wrongful termination does not mean that you were fired for something you didn't do; it means that you were fired for a reason prohibited by law. 2.) The above answer, whatever it is, assumes that no legally binding contract or CBA expressly says otherwise. If it does, the terms of the contract apply.
  12. #12
    Join Date
    Dec 2014
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    5
    Yes, I will still appeal. As you indicated, it never hurts...but I won't have expectations that it will help. I now, thanks to you, better understand that if my employer does not grant my request is because they have to abide to their own deadlines, as they are scrutinized by the IRS. Again, thank you!


  13. #13
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    Mar 2016
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    Quote Originally Posted by borrayo View Post
    Yes, I will still appeal. As you indicated, it never hurts...but I won't have expectations that it will help. I now, thanks to you, better understand that if my employer does not grant my request is because they have to abide to their own deadlines, as they are scrutinized by the IRS. Again, thank you!
    Hello, Borrayo, in case you could still see this post, would please reply, I wanted to know what is your final results, is there any luck, do you have any information could share with me. Such like the structure of your appealing letter. The same thing happened for me, and I had 5000 for dependent care FSA and 500 for medical care FSA. I spoke to my HR, they told me "there are not much they could do". Again, I very much appreciated any information.


  14. #14
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    Nothing has changed since this thread originated over a year ago. The rules are still the same. The employer still has ONE opportunity to choose a deadline date and once it is chosen, it is still set in stone. If you didn't submit the claim in time too bad so sad but the employer cannot do anything about it. That's not, will not - that's can not. It was up to you to get the claim in on time and short of being comatose in the hospital for the entire period or the above-mentioned trip to the Amazon jungle, if you miss it that's all she wrote. This is Federal law/IRS regulation, not an arbitrary decision on the part of the employer.


    Two things I am tired of typing: 1.) A wrongful termination does not mean that you were fired for something you didn't do; it means that you were fired for a reason prohibited by law. 2.) The above answer, whatever it is, assumes that no legally binding contract or CBA expressly says otherwise. If it does, the terms of the contract apply.
  15. #15
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    Mar 2006
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    20,183
    Quote Originally Posted by cbg View Post
    It's not a guideline - it's a rule, and if they violate it, they'd better have a very, very, very good reason why. "I forgot" is not going to be an acceptable reason. "I was on work related business in the Amazon jungle from May through December and had no contact with the world at large" would *probably* be an acceptable reason.
    I agree with your post in detail and general. As to this point, I am uncertain. I have not researched the matter. But, even the reason suggested is not guaranteed to fly. Just sayin'

    (While knowing cbg was trying to imagine a circumstance that might fulfill the regulations.)

    [With the age of the post I responded to, I suggest wei210 starts a thread.]


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