,,ii  #aafth ,,congress  #b;d ,session  
,s4 #dcgb  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,july #cj1     
#bjbj,ms4 ,smith introduced the         
following bill2 which was read twice and
 referred to the ,committee on ,finance 
,a ,,bill  ,to provide for unused       
benefits in a dependent care ,,fsa to be
 carried over from #bjbj to #bjba1 to   
provide for benefits to be accessed     
after termination of employment1 and for
 other purposes4  #a4 ,short title ,this
 ,act may be cited as the ,dependent    
,care ,expense ,relief ,act of #bjbj4   
#b4 ,carry over of dependent care ,,fsa 
benefits from #bjbj  7a7 ,in general    
,notwithstanding any applicable rule or 
regulation under section #abe or #abi of
 the ,internal ,revenue ,code of #aihf--
 7#a7 a dependent care flexible spending
 arrangement shall permit participants  
who make the certification under        
subsection 7b7 to carry over any amount 
of unused benefit or contribution       
7without limitation7 from any plan year 

beginning or ending in #bjbj to the     
subsequent plan year under rules similar
 to the rules applicable to health      
flexible spending arrangements1 and     
7#b7 a plan or other arrangement shall  
not fail to be treated as a cafeteria   
plan or dependent care flexible spending
 arrangement merely because such plan or
 arrangement permits the carryover under
 paragraph 7#a74  7b7 ,certification by 
employee ,in applying for the carryover 
under subsection 7a77#a71 the employee  
shall certify that the amount to be     
carried over is attributable to a       
reduction in expected dependent care    
expenses in the plan year due to a      
reduction in work hours1 lack of        
available dependent care1 or both1 or   
other factors as determined by the      
,secretary of the ,treasury 7or the     
,secretary's delegate7 due to the       
outbreak of coronavirus disease #bjai   
7,,covid-#ai7 in the ,united ,states4   
7c7 ,penalty  7#a7 ,in general ,there is
 hereby imposed a tax on the failure of 

a covered cafeteria plan to meet the    
requirements of subsection 7a77#a7 with 
respect to any employee4  7#b7 ,amount  
of tax  7,a7 ,in general ,the amount of 
the tax imposed by paragraph 7#a7 on any
 failure with respect to an employee    
shall be #ajj for each day in the       
noncompliance period with respect to    
such failure4  7,b7 ,noncompliance      
period ,for purposes of this subsection1
 the term noncompliance period means1   
with respect to any failure1 the        
period-- 7i7 beginning on the date such 
failure first occurs1 and  7ii7 ending  
on the earlier of-- 7,i7 the date such  
failure is corrected1 or  7,,ii7 the    
date which is #f months after the date  
the employee terminates employment with 
the employer4  7,c7 ,limitations ,rules 
similar to the rules of subsections     
7b77#c7 and 7c7 of section #dihj;,b of  
the ,internal ,revenue ,code of #aihf   
shall apply with respect to the tax     
under this section4  7#c7 ,covered      
cafeteria plan ,for purposes of this    

subsection1 the term covered cafeteria  
plan means a cafeteria plan under which 
a benefit is provided through employer  
contributions to a dependent care       
flexible spending arrangement4  7#d7    
,liability for tax ,rules similar to the
 rules of section #dihj;,b7e7 of the    
,internal ,revenue ,code of #aihf shall 
apply for purposes of determining       
liability for the tax imposed under this
 section4  7#e7 ,collection of tax ,the 
tax imposed by paragraph 7#a7 shall be  
collected in the same manner as the tax 
under section #dihj;,b of such ,code4   
7d7 ,definitions ,any term used in this 
section which is also used in section   
#abe of the ,internal ,revenue ,code of 
#aihf or the rules or regulations       
thereunder shall have the same meaning  
as when used in such section or         
regulations4  7e7 ,plan amendments ,a   
plan or arrangement shall not be treated
 as violating the requirements of       
subsection 7a77#a7 7including for       
purposes of subsection 7c771 if-- 7#a7  

the plan or arrangement is amended to   
meet such requirements on or before     
,december #ca1 #bjbj1  7#b7 such        
amendment applies retroactively to any  
plan year ending in #bjbj1 and  7#c7 the
 plan or arrangement operates in        
accordance with such requirements at all
 times after the date of the enactment  
of this ,act4  ,a plan or arrangement   
shall not be treated as failing to      
satisfy any requirement of the ,internal
 ,revenue ,code of #aihf merely because 
the plan or arrangement operates as     
provided in subparagraph 7,c74  #c4     
,spend-down of benefits in dependent    
care flexible spending accounts  7a7 ,in
 general ,chapter #dc of the ,internal  
,revenue ,code of #aihf is amended by   
inserting after section #dihj the       
following new section3  #dihj;,a4       
,treatment of unused benefits in        
dependent care flexible spending        
arrangements  7a7 ,general rule ,there  
is hereby imposed a tax on the failure  
of a covered cafeteria plan to meet the 

requirements of subsection 7c7 with     
respect to any employee4  7b7 ,amount of
 tax  7#a7 ,in general ,the amount of   
the tax imposed by subsection 7a7 on any
 failure with respect to an employee    
shall be #ajj for each day in the       
noncompliance period with respect to    
such failure4  7#b7 ,noncompliance      
period ,for purposes of this section1   
the term noncompliance period means1    
with respect to any failure1 the        
period-- 7,a7 beginning on the date such
 failure first occurs1 and  7,b7 ending 
on the earlier of-- 7i7 the date such   
failure is corrected1 or  7ii7 the date 
which is #f months after the date the   
employee terminates employment with the 
employer4  7#c7 ,limitations ,rules     
similar to the rules of subsections     
7b77#c7 and 7c7 of section #dihj;,b     
shall apply with respect to the tax     
under this section4  7c7 ,distributions 
after termination of employment ,a      
covered cafeteria plan meets the        
requirements of this subsection only if 

the cafeteria plan provides that1 if an 
employee who is receiving benefits      
provided through employer contributions 
to a dependent care flexible spending   
arrangement ceases 7whether voluntarily 
or involuntarily7 to work for the       
employer during the plan year1 the      
employee may elect to be reimbursed from
 unused benefits for dependent care     
expenses incurred-- 7#a7 after the date 
the employee terminates employment with 
the employer1 and  7#b7 before the last 
day of such plan year 7including any    
grace period under the arrangement74    
7d7 ,covered cafeteria plan ,for        
purposes of this section1 the term      
covered cafeteria plan means a cafeteria
 plan under which a benefit is provided 
through employer contributions to a     
dependent care flexible spending        
arrangement4  7e7 ,definitions ,any term
 used in this section which is also used
 in section #abe of the ,internal       
,revenue ,code of #aihf or the rules or 
regulations thereunder shall have the   

same meaning as when used in such       
section or regulations4  7f7 ,liability 
for tax ,rules similar to the rules of  
section #dihj;,b7e7 shall apply for     
purposes of determining liability for   
the tax imposed under this section4  4  
7b7 ,clerical amendment ,the table of   
sections for chapter #dc of the         
,internal ,revenue ,code of #aihf is    
amended by inserting after the item     
relating to section #dihj the following 
new item3  ,sec4 #dihj;,a4 ,treatment of
 unused benefits in dependent care      
flexible spending arrangements4  4  7c7 
,effective date  7#a7 ,in general ,the  
amendments made by this section shall   
apply to plan years ending after the    
date of the enactment of this ,act4     
7#b7 ,plan amendments ,a plan or        
arrangement shall not be treated as     
violating the requirements of section   
#dihj;,a7c7 of the ,internal ,revenue   
,code of #aihf1 as added by this ,act   
7including for purposes of section      
#dihj;,a7a7 of such ,code1 as so added71

 if-- 7,a7 the plan or arrangement is   
amended to meet such requirements on or 
before the last day of the first plan   
year ending after the date of the       
enactment of this ,act1  7,b7 such      
amendment applies retroactively to such 
first plan year1 and  7,c7 the plan or  
arrangement operates in accordance with 
such requirements at all times after the
 date of the enactment of this ,act4  ,a
 plan or arrangement shall not be       
treated as failing to satisfy any       
requirement of the ,internal ,revenue   
,code of #aihf merely because the plan  
or arrangement operates as provided in  
subparagraph 7,c74  #d4 ,dependent care 
expenses ,as soon as practicable after  
the date of the enactment of this ,act1 
the ,secretary of the ,treasury 7or the 
,secretary's delegate7 shall issue such 
interim or temporary rules or guidance  
as are necessary to expand the          
definition of dependent care expenses   
eligible to be reimbursed from a        
dependent care flexible spending        

arrangement1 to account for changes in  
the dependent care needs of taxpayers   
due to-- 7#a7 the emergency involving   
,federal primary responsibility         
determined to exist by the ,president   
under section #eja7;b7 of the ,robert   
,t4 ,stafford ,disaster ,relief and     
,emergency ,assistance ,act 7#db        
,u4,s4,c4 #eaia7;b77 with respect to    
coronavirus disease #bjai 7,,covid-#ai71
 and  7#b7 the national emergency       
declared by the ,president under the    
,national ,emergencies ,act 7#ej        
,u4,s4,c4 #afja et seq47 with respect to
 coronavirus disease #bjai              
7,,covid-#ai74  ,such rules or guidance 
shall remain in effect until the last   
day of either such emergency1 whichever 
is later4