During the ECFC Conference (August 19), Harry Beker and Elizabeth Purcell from the IRS Associate Chief Counsel Office filled attendees in on the following issues:

Mr. Beker's office will be responsible for the following major projects:

Guidance on § 125 and FSA Grace Period.  This guidance will clarify the following issues not addressed in IRS Notice 2005-42:

• Dependent Care Benefits: The interplay between grace period and IRS Notice 89-111 and the $5,000 annual statutory cap.
• HSA Eligibility: Impact of the new grace period. (Strong hints that new options will let employers offer a FSA grace period without jeopardizing HSA eligibility.)

Debit Card Guidance.  This guidance will include:

• Clarification on acceptable/unacceptable practices.
• Guidance on using debit cards at non-medical providers who have technological safeguards to ensure that expenses are for medical expenses.
• Possible expansion of current auto-adjudication framework to allow multiples of co-pays.
• Guidance for transportation expenses.

Proposed cafeteria plan regulatory project.  This project wil address consolidating and re-issuing the existing multiple sets of cafeteria plan regulations under this year's business plan.

Although the following is not primarily Mr. Beker's responsibility, his office will have substantial input on this new guidance.

• New regulations concerning the dependent child care credit which will affect DCAPs.
• Guidance about the WFTRA change in dependent definition.
• Guidance addressing payment of transit and parking expenses by electronic payment cards.