Newspaper article THE JOURNAL RECORD

IRS Adds New Credit Card Alternative for Paying Taxes

Newspaper article THE JOURNAL RECORD

IRS Adds New Credit Card Alternative for Paying Taxes

Article excerpt

WASHINGTON -- For the first time, many Americans will be able next year to use credit cards to pay their tax bills to Uncle Sam.

The Internal Revenue Service hopes the ability to pay by credit card will encourage more people to file tax returns electronically, even though taxpayers also will be charged a fluctuating "convenience fee" to use credit cards.

And it's still uncertain if Visa International -- the world's largest credit card issuer -- will get on board.

Still, the move announced Thursday is a big step forward for the IRS. It has been wrestling for years with how taxpayers could use their favorite plastic to pay their most despised bills. About 24.5 million taxpayers filed electronically this year.

"Our responsibility, we believe, is to give folks the widest possible array of payment options," said Steve Holden, the national electronic program director at IRS. "Many consumers will find it convenient to use their credit cards."

Beginning next year, taxpayers can pay IRS bills two ways with credit cards:

* Holders of MasterCard, American Express, Discover -- possibly Visa -- cards will be able to charge their balances due by calling a toll-free number. It won't matter whether the tax returns are done manually, through a paid preparer or electronically. This phone system is being run by US Audiotex of San Ramon, Calif.

* Holders of Discover or Private Issue cards issued by Novus Services, using Intuit's popular TurboTax or MacInTax preparation software, will be able to complete and file their returns and pay their taxes using personal computers.

In both cases, taxpayers will be charged fees for the service based on the size of their tax bills. Officials at Audiotex and Novus said they have not determined how much the fees will be or how they will be calculated.

By far the biggest remaining question is whether Visa will join other card companies on the Audiotex system.

Visa, with about 600 million cards in circulation, wants the taxpayer charged a flat fee rather than a fee based on the tax bill - - an arrangement that Audiotex believes would cost it money, said Steve Johnson, Audiotex senior vice president. …

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