The IRS will not intervene in a contract dispute between you and the FSA plan. Read the plan document, and then see a lawyer if necessary.

Interesting- so the IRS has no rules about submitting things like proof?  Those rules would be from the plan administrator?

the question is if they are correct that the proof was filed after the filing deadline for the plan. If they are wrong, you need to fight them

<a rel="nofollow" target="_blank" href="https://www.forbes.com/sites/ashleaebeling/2015/03/31/the-misunderstood-march-31-fsa-run-out-deadlin...>

Under a special rule, employers may, IF THEY CHOOSE, offer participating employees more time. So you must read the plan documents.

A medical FSA is typically not reported on your tax return one way or the other, so I'm not familiar with what the plan administrator will do in this case.

Presumably you used a credit card linked to an FSA to pay a bill, then submitted documents, and the plan administrator claims that the expense was not allowed.  This is due diligence they are required to perform, because if they allowed non-allowable expenses, the employer could get in trouble with the IRS.  That doesn't mean they are always right.  But, do you know what form or how they plan to report the matter to the IRS?  Normally medical FSAs don't issue any forms or reports (unlike HSAs which do issue reports).

Also, if the plan rule says that the expense must be incurred in the 2016 calendar year and the bill must be submitted by X date in 2017, that's generally not negotiable.

Thanks Opus & Sweetie.  This helps a lot.  I used the debit card at a doctor's office for a copy and at a chiropractor.  I never submitted proof because i figured that since the CC machine used was coded as ABC Doctor's Office and ABC Chiropractor they'd be fine.  Nope.     The letter the FSA sent indicated my former employer would issue a new W2 for me and say the $300 was taxable income.    I have no idea what the plan document says about this stuff but I will request it.   Since this all sounds more like a contract dispute between me and the FSA and not an IRS rule I suppose i could ask a  state employment regulator for help.  The taxes on $300 is not the end of the world but the whole thing just makes me angry-- since these expenses were medical copays.

Perhaps 'copy' was a mistyping of 'copay.'

Makes sense. Incidentally, if the expenses are added back to your W-2, then you can deduct them on schedule A as itemized medical expenses. However, due to the limitations on the deduction, you probably won't get a benefit.

Correct! I had a typo-  it is copay 🙂  And yes, the $300 won't help much on my schedule A.   I requested the plan documents and will be interested in what they say.  I live in California which is usually pretty consumer friendly.  If there is any ambiguity in what the plan doc says i'll happily try to get some help.