Originally published April 7 2005
Paying taxes with plastic may lead to further debt
by Mike Adams, the Health Ranger, NaturalNews Editor
The IRS received 950,715 credit and debit card payments in 2004, triple the number registered for 2002. 834,000 tax payments were automatically transferred from checking or savings accounts. This is indicative of a cashless society, as well as consumers' tendency to create debt when it's not necessary. Experts say that taxes should only be put on credit cards when absolutely necessary, and only if it can be paid in the same month. David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, says that people are using their credit cards to compensate for bad financial planning, which can be dangerous.
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 says 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 says.
"The country is moving toward becoming a cashless society," says James Weaver, chairman and chief executive of Tier Technologies of Reston, Va., which does card processing of IRS payments.
Tier Technologies owns Official Payments, 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.
David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, says people who find they're short of money to cover taxes as the April 15 filing deadline approaches probably haven't had enough withheld by their employers.
These consumers might be better off, he says, tapping a line of credit against their homes or taking a short-term loan from a credit union or local bank.
Kathy Seitz, a managing partner with CBIZ Accounting Tax & Advisory Services in Cleveland, says she's seeing more credit card payments by small business owners, especially those making estimated tax payments on a quarterly basis.
She noted 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 to put a payment link into their TaxCut software; Official Payments has a similar deal with Intuit's TurboTax.
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