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A Simple, Rewarding Way to Pay Your Taxes with a Charge or Credit Card

Again this April, for the fourth year in a row, many taxpayers will use charge or credit cards to pay their 2001 federal or state taxes. According to the Internal Revenue Service, approximately $675 million was charged on plastic during last year’s tax season, compared with $184 million in 1998.

For some, the choice of plastic as a payment instrument is more than a mere convenience, since it also enables them to earn points under a card-related rewards program. American Express makes this tax-paying option available to its customers. *

The payments are actually channeled through third-party payment processors that charge the taxpayer a convenience fee based on the amount of the payment. All information is held in confidence, and the taxpayer’s card number is not shared with the government agency.

How the process works. There are three payment service providers that accept payments made with American Express, Discover or MasterCard cards. They are Official Payments (1-800-9PAYTAX), CorpPhone Charge, Inc. (1-888-ALL-TAXX), and govOne Solutions, (http://www.govonesolutions.com).

The process is simple:

• The taxpayer contacts the processor online or by phone, and follows the simple step-by-step process to charge his or her taxes using a credit card. After completing the instructions, the taxpayer receives a confirmation number from the processing company as proof the payment has been processed.

• The taxpayer doesn’t need to call the card issuer. The charge will be handled exactly like any other transaction.

• Once the card issuer approves the tax payment and convenience fee, the funds are sent to the government.

What taxes can be paid? Again this year, taxpayers paying with plastic will have the option of paying any balance due on their federal taxes (Form 1040), requesting an extension of time to file (Form 4868) or paying their estimated taxes (Form 1040 ES).

If you plan to pay your taxes with your credit or charge card, be sure to first make sure your state accepts your choice of card. For example, Pennsylvania and Rhode Island are the two new states accepting the American Express Card for payment of state taxes for the 2001 season. Others include Alabama, Arkansas, California, Connecticut, Illinois, Indiana, Iowa, Kansas, Maryland, Minnesota, Mississippi, New Jersey, New York, Ohio, Oklahoma, Virginia, Washington, Wisconsin, West Virginia and the District of Columbia – for a total of 21.

Taxpayers wishing to use a charge or credit card to pay a variety of personal and business balance due state taxes, estimated taxes, or to file for extensions either by phone or via the Internet, should check regulations in their state with the appropriate state agency or Official Payments Corporation.

March 14, 2002

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