Originally published March 23 2005
Credit experts are alarmed at Americans' new tendency to pay taxes by credit card
by Mike Adams, the Health Ranger, NaturalNews Editor
More and more people are using their credit cards to pay their taxes and this new trend has credit experts worried. This tendency to use credit cards for tax payment may show a tendency toward financial mismanagement, since paying taxes by credit card will not only put money onto a high-interest loan, it also adds a 2.49 percent surcharge to the tax owed. However, others merely point to this as an inevitable upshot of the new, cashless society.
As more Americans file their taxes electronically, they're also more likely to use credit and debit cards to pay the taxes due.
The Internal Revenue Service said it received 950,715 credit and debit card payments in 2004, triple the volume of 2002.
An additional 834,000 payments last year were automatically transferred from checking or savings accounts, the IRS said.
"We're seeing more than 20 percent growth a year, and we would expect that type of growth to continue for the foreseeable future."
Tier Technologies owns the Official Payments Corp., one of two companies that manage call centers and Web sites to handle card payments for federal, state and local tax payments.
That means a consumer who uses a credit card to pay a $1,000 tax bill would have to add an additional $24.90 in processing fees.
Credit experts are concerned that for some consumers, the use of credit cards to pay taxes is a sign they're mismanaging their money.
Jones sees no problem charging taxes if the consumer can pay the bill in full at the end of the month.
Kathy Seitz, a managing partner with CBIZ Accounting Tax & Advisory Services in Cleveland, said she's seeing more credit card payments by small business owners, especially those making estimated tax payments on a quarterly basis.
She noted that the two online services allow consumers to set the date they want the payment made, either from a credit card or a debit card.
Link2Gov, for example, has partnered with H&R Block Inc. to put a payment link into their TaxCut software; Official Payments has a similar deal with Intuit's TurboTax.
Discover Financial and MasterCard International will waive the 2.49 percent card processing fee for taxpayers who file via their Web sites through H&R Block.
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