Treasury and the IRS published a final rule on Monday letting the agency accept tax payments by credit or debit card directly, effective the same day.
Zoom in: The rule, TD 10060, lifts two old restrictions: a bar on the IRS paying any fee under a card-processing contract, and a bar on the IRS imposing any fee or charge on people who pay tax by credit or debit card.
The backstory: Section 2303 of the Taxpayer First Act, signed July 1, 2019, created the exception. The regulation it replaces dates to December 14, 2001 and routed taxpayers to outside processors. Treasury proposed these amendments on July 2, 2024 and has now adopted the text unchanged.
Yes, but: Any fee the IRS pays has to be "fully recouped from the persons paying taxes by credit or debit card," so the cost stays with the taxpayer rather than the government.
- The agency says the change lets a taxpayer pay by card directly, including over the telephone, with no separate wait to be connected to a third-party processor.
By the numbers: Treasury and the IRS received eight comments on the proposal. A public hearing was requested and then cancelled, because the speaking list came up empty.
What they're saying: Most commenters backed the change, noting in the preamble that paying the IRS by card directly would simplify the process, reduce costs to taxpayers and encourage more people to pay on time.
The other side: One commenter supported the rule on the condition that card use stay free. Treasury answered that the statute hands the Secretary discretion to pay a processing fee so long as it is fully recouped from card-paying taxpayers.
Why it matters: Paying a tax bill by card is the convenient option and the expensive one, and this clears the path for the IRS to run it in house, which should guarantee the agency receipt of funds and cut paper check processing. The number to watch is the fee set in the eventual contract, because the law requires card users to cover all of it.
