How to pay taxes: Credit cards and Bill Pay

I would suspect they are selling a payment service and not charging for use of the credit cad.

I assume you could always do that, but if you have money in your bank account, it may be simpler to just have the IRS e-debit your bank account on a date you specify.

The IRS wants the check to be accompanied by either a tax return or a voucher. That tells them whom to credit the payment to, for what tax year, and whether it's estimated tax, original return, amended return, etc. They don't want to get checks with stubs in a lot of different formats, and have to try to figure out what to credit them to.

Bob Sandler

Not so true, right now the centers are under crunch time processing all the refund returns from the early bird filers, who are anxious to get refunds in the next several weeks. March is lull time, then April, May & June is peak crunch for remittance returns

You are placing yourself at great risk of undue penalty & interest assessments which may cause your net liability to go into final collection actions, while the ~lost~ check is being researched.

The processing centers handle tens of thousands of checks every day during peak season, when the remittances arrive with the required posting voucher the error rate is substantially reduced. Right now most of the Remitt's for ES deposits are being posted that arrived on 1/15, as soon as the lull comes around, much of this staff will be laid off for a few weeks until the next remittance peak arrives.

Loose checks & those intentionally sent with out vouchers require manual research & preparation on a form 3244, clerical errors arise during this process, if your check-free service fails to encode your account information in the memo correctly SSN, FORM, TAX-YEAR, TAX PAYER NAME. The check will be cashed & posted to the unidentified remittance register, where 100's of checks post each day, think of it as a holding pen for receipts.

While you funds are safely deposited to the UIRR, the assessment of your tax return continues, since the final payment is not on ~your~ tax account a balance due & payable letter is generated, that would be your first indication that something went wrong.

Now -YOU- are burdened with getting your check processer to produce a copy of the front & back of the remittance, which you would forwarded to the IRS so that they can research what record in the UIRR holds your funds.

This takes days, weeks & sometimes months to straiten out, during which additional dunning letters will be issued, and worst case scenario, Liens & Levy's could be issued.

Do not place yourself at unneeded risk, if you have the funds as cash or deposited to your account, write the check & send it with the 1040 voucher, use EFTPS.

If you're borrowing from your credit card using a DRAFT check, then you're liable for the user fee that is traditionally charged to the customer in this type of transaction.

Another possibility is the following.

I actually have 3 (or 4) checking accounts.

I only have checks for 1 of those accounts, the left over Fleet checks that BAC still honors. Let's call this MYAccount.

Another account at BAC is set up for the day I start accepting credit cards. Let's call this CCAccount.

Yet another account Elswhere. Let's call this ElsewehereAccount.

Currently, I do all my bill pays from MyAccount. I have not written a check since 30 Sep 2005, as that was required to pay the initial registration fee for my car, and to pay for the car.

CCAccount is intended to process credit card sales from shareware that I expect to issue later this year, so that account will be linked to either PayPal or another merchant card processor.

Other than minimum balances required by the merchant card processor, funds will not be left in CCAccount, rather they will be moved to ElsewhereAccount.

So, in addition to required balances, I could include just enough in CCAccount to cover taxes and use EFTPS.

========================================= MODERATOR'S COMMENT: Please do not start your message on the Subject line. The message should be complete in itself without reference to the Subject line.

I've been using EFTPS and direct debit for 4+ years with zero problems. They withdraw only the amount I've authorized, on precisely the day I've directed. I retain records of my authorizations, as do the Feds.

If you don't feel comfortable using EFTPS/direct debit, I would STRONGLY recommend using the quaint method of writing a paper check and attaching it to your paper return. Sending an electronic check payment to the IRS is, as your bank suggested, a bad idea.

By the way, there's relatively little difference between the processing of a paper check and the processing of a direct debit. A check is merely a paper authorization to process a debit, and it carries pretty much the same information as the debit authorization (routing/acct/amount/date/authentication). Processing of a large proportion of checks now includes "truncation", i.e., imaging of the check followed by its shredding. It won't be long until return of cleared checks will be no more than an anachronism.

Lots of snippage -

I'd been hoping the OP would get back to us and elaborate on his original message. When that didn't happen I took some time and I think I have FOUND what he was referring to. Here's what I found -

First, I found this info at -

Here's one of the NEW rules credit card companies will have to follow - "Credit card issuers will not be able to charge additional payment penalties for accepting payments by mail, phone, electronic transfer, or any other means, unless the payment is processed through an expedited service processor."

I THINK the OP is alluding to this rule. Under the old rules if I called AmEx to make a payment over the phone they could charge me an extra fee to take my payment over the phone.

True Story - Last summer I was out of town on vacation with my AmEx bill arrived. When I got home and saw the bill I did NOT have enough time to mail a check and have them get it. I did NOT want to be late so I called to make a payment over the phone with my bank info. AmEx actually wanted to charge me $15 extra to make a phone payment. I asked why and was told "Because we can?" I fussed so much that they actually waived the fee, I made my payment and kept my account in good standing. The new law seems to prohibit them from charging this fee.

I saw NOTHING in the law that prohibits credit card companies from charging a fee to a taxpayer who uses a credit card to pay a tax debt - which is what I think Link2Gov, RBS WorldPay, and Official Payments Corporation do. As a side note, Federal Law prohibits the government from paying the fees that a regular merchant would pay.

Hope this helps, Gene E. Utterback, EA, RFC, ABA

Lots of snippage

OK, I'll bite - Why you not authorize such access?

The process works well and the IRS is prohibited by law from taking more than they should at a time different from when you authorize them to.

If its access to your account that concerns you, you do know that they get all your banking info from the real check you send them anyway, right?

Also, under certain circumstances the use of the EFTPS system is REQUIRED (not usually to pay personal taxes, but for certain business and payroll taxes for employers and companies it sometimes is).

Gene E. Utterback, EA, RFC, ABA

That would mean the Mint isn't part of the government (since it sells coins at face and takes credit cards without surcharge).

Seth