A credit card system is a type of retail transaction settlement and credit system, named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the users' account after every transaction. In the case of credit cards, the issuer lends money to the consumer (or the user). It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810 standard.
Features and Benefits:
It's convenient - Taxpayers can e-file or paper file early, make a payment by credit card and yet delay out-of-pocket expenses. Credit card payments can be made by phone, on-line or when e-filing. It's safe and secure - standard, commercial credit card networks are used. The IRS does not receive or store credit card numbers. Credit card options are available through service providers. There is a fee charged by credit card payment service providers. Fees are based on the amount of the payment and may vary by service provider (see below). Payment information will not be disclosed for any reason other than processing the transaction authorized by the taxpayer.
A confirmation number is provided at the end of the phone or Internet transaction. The "United States Treasury Tax Payment" is included on the credit card statement as further proof of payment. The convenience fee will be included on the statement as a "Tax Payment Convenience Fee" (or similar transaction). If enrolled in such a program, taxpayers may earn miles, points, rewards or money back from the credit card issuer.
Credit Card Convenience Fees
Taxpayers will be informed of the convenience fee amount before the payment is authorized. This fee is in addition to any charges, such as interest, that may be assessed by the credit card issuer. Taxpayers must agree to the terms and conditions of the payment including acceptance of the convenience fee before the transaction is completed. The Taxpayer Relief Act of 1997 authorizes the Treasury to accept credit card payments for federal taxes but prohibits the IRS from paying a fee or consideration to credit card companies for processing these transactions. In order to give taxpayers the option of paying taxes by credit card, IRS has entered into non-monetary contracts and agreements with credit card payment service providers. The service providers act in the capacity of merchants and are necessary intermediaries in credit card transaction processing. The service providers validate credit card numbers and expiration dates, obtain authorization from the credit card issuers and issue confirmation numbers to taxpayers at the end of the payment transaction. The service providers forward tax payment information to the IRS for posting to taxpayer accounts. The IRS does not receive or charge any fees for payments. Additionally, the IRS cannot pay or reimburse any convenience fee to taxpayers. The fee is a non-deductible personal expense; however, it is a deductible business expense.
How to Make a Credit Card Payment
The integrated e-file and e-pay credit card option is available through a number of tax preparation software products and tax professionals. For additional information about e-filing and paying all at once (including convenience fees and accepted credit cards), taxpayers can refer to tax preparation software or a tax professional. When paying through tax preparation software, users will be prompted to enter the necessary credit card information. Pay by phone and Internet (on-line) options are available through credit card payment service providers. When paying by phone, a recorded script will prompt taxpayers through the call. When paying by Internet, taxpayers will be prompted to complete the necessary entry fields.