Q.- We have an employee in our Dependent Day Care FSA who cannot get a tax ID for her daycare provider. Can her claim still be reimbursed?
A.- Yes. Under IRS rules, the employee has to exercise “due diligence” in attempting to obtain the TIN. This is considered a “serious and earnest effort” to get the information from the provider. The employee can ask the provider to complete IRS Form W-10 https://www.irs.gov/pub/irs-pdf/fw10.pdf.
The Tax ID is needed because when the employee files his tax return, he has to provide the TIN on Form 2441. If the day care provider refuses to provide an ID, the employee will have to submit a statement with his tax return saying he tried to get the information but the provider would not give it.