IRS Releases Information Letters on Substantiation Rules for Health FSA Debit Cards

Murtha Cullina
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The IRS recently released two Information Letters addressing the substantiation rules that apply to health flexible spending account (FSA) debit cards. (As an aside, IRS Information Letters call attention to a well-established interpretation or principle of tax law without applying it to a specific set of facts. Thus, although IRS Information Letters do not break new legal ground, they often provide helpful reminders about legal requirements that should be front-of-mind.)

One IRS Information Letter, Number 2021-0003 (released on June 25, 2021) responded to an inquiry sent by a U.S. Senator on behalf of a constituent whose wife’s health FSA debit card was deactivated when she did not provide documentation, requested by the plan administrator, to substantiate medical expenses paid with a debit card linked to a health FSA under an Internal Revenue Code Section 125 cafeteria plan.

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