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IRS SEEKS SOME CREDIT FOR TAXES; PROGRAMS TO ALLOW PAYMENT BY PLASTIC.

Byline: Curt Anderson Associated Press

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 whether 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, either by calling a toll-free telephone number, run by US Audiotex of San Ramon, Calif., or by using some of the most popular tax-preparation software on the market.

In both cases, taxpayers will be charged fees for the service based on the size of their tax bills. Officials with both services 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.

Visa officials did not immediately return calls seeking comment. Johnson, however, said the company is scheduled soon to decide whether to give the Audiotex plan a try.

Many believe Visa, which has about half the U.S. credit card market, will find it difficult to ignore such a potentially huge market.

``There's too many chips on the table for them not to do it,'' said Frank O'Leary, treasurer in Arlington County, Va., which had the first credit card taxpaying system in the country.

HOW THE PLAN WILL WORK

Beginning next year, taxpayers will have two ways to pay bills to the Internal Revenue Service with credit cards:

By telephoning 1-888-2PAY-TAX, holders of MasterCard, American Express, and Discover - Visa has not made a decision on joining the program - will be able to charge their balances that are due to the IRS. This method will work with any kind of filing, whether done manually, through paid preparers or electronically. This system is being run by US Audiotex of San Ramon, Calif. The toll-free number currently is used by Audiotex for people who file local or state taxes in some areas and is not yet being used for federal taxes.

By using Intuit's popular TurboTax or MacInTax preparation software, holders of the Discover or Private Issue cards - both issued by Novus Services Inc., which is running this system - can fill out their returns and pay balances due while sitting at their home personal computers.

Associated Press

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BOX: HOW THE PLAN WILL WORK (See text)
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Aug 21, 1998
Words:552
Previous Article:PEDAL (AND) POWER; ELECTRIC SYSTEM LICENSED TO SCHWINN.
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