I was surprised to read in the NY Times that indulgences have returned to a place of prominence in Roman Catholic practice:
For Catholics, a Door to Absolution Is Reopened by PAUL VITELLO Published: February 9, 2009 in the NY Times.
What is an indulgence?
"According to church teaching, even after sinners are absolved in the confessional and say their Our Fathers or Hail Marys as penance, they still face punishment after death, in Purgatory, before they can enter heaven. In exchange for certain prayers, devotions or pilgrimages in special years, a Catholic can receive an indulgence, which reduces or erases that punishment instantly, with no formal ceremony or sacrament." (from the NY Times article)
So what does the Episcopal Church believe?
Out of our birth in the English reformation and our formation after the American Revolution, I would say that the Articles of Religion from 1801 that are in the Historical Documents section of our Book of Common prayer say it clearly:
XXII. Of Purgatory.
The Romish Doctrine concerning Purgatory, Pardons, Worshipping and Adoration, as well of Images as of Relics, and also Invocation of Saints, is a fond thing, vainly invented, and grounded upon no warranty of Scripture, but rather repugnant to the Word of God. (BCP p. 872)
In other words, we do not follow RC practice of purgatory or indulgences.