DEBIT CARD TRANSITION RELIEF FOR USE AT NON-HEALTH CARE MERCHANTS
IRS Notice 2007-2 (Dec. 14, 2006)
For a copy: http://www.irs.gov/pub/irs-drop/n-07-02.pdf
HR Simplified, Inc., with other industry leaders, has been working with the IRS to clarify debit card use following July’s IRS Notice 2006-69.
Today, the IRS has released welcome guidance under Notice 2007-2 that clarifies debit card use at merchants with merchant category codes (MCC’s) related to grocery stores, discount stores, wholesale clubs, and mail order vendors and web based vendors that sell prescription drugs.
These MCC’s will fall under the definition of “other medical care providers” within the meaning of Situation 1 of Rev. Rul. 2003-43 until 12/31/2007. Debit card purchases made at the specified MCC’s can continue to be adjudicated under the medical expense rules in Revenue Ruling 2006-69 which include copay and recurring expense matching as well as third party claims substantiation methods through December 31st, 2007.
After December 31st, 2007, these specified MCC’s such as supermarkets, grocery stores, discount stores, and wholesale clubs will need to have an Inventory Information Approval System (IIAS) as described in IRS Notice 2006-69. Additionally, after December 31st, 2008, merchants with the drug store and pharmacy merchant category codes must also have the IIAS in place.
HR Simplified welcomes this further clarification on debit card use. Currently, HR Simplified, and its debit card partner Metavante (MBI), provides industry leading multiple copay matching tools, recurring expense functions, third party over-the-counter and prescription feeds on our benefit administration platform that help you conform to these IRS guidelines.
HR Simplified and MBI continues to be actively engaged with the various grocery store, discount store, and other retail store associations to develop a standard IIAS solution within the IRS timetable described above.