Charge It!


Beginning next year, taxpayers will be able to charge their taxes to a major credit card.

As part of its plan to increase electronic filing and payment of taxes (the goal is to receive 80% of all returns by 2007), the IRS entered into agreements with private companies to provide the new service.

"A lot of people will want to pay their taxes with credit cards, and that might increase compliance," said Jamie L. Ward, a CPA with Denman & Co., LLP, Des Moines, Iowa, and a member of the Institute's 1997-98 tax technology committee.

"The IRS will collect more, and that will work in their favor," she said.

Under the new agreement, US Audiotex of San Ramon, California, will process tax credit-card payments by phone. Taxpayers using US Audiotex and filing electronically (by home computer, by Telefile or through a preparer) will be able to charge their taxes with a toll-free phone call.

Taxpayers filing their taxes using Intuit's Turbo Tax or MacInTax software will be able to charge their taxes through NOVUS Services, Inc., of Riverwoods, Illinois. Taxpayers will be able to use any credit card issued by NOVUS to make the charges.

IRS Teams Up With Companies for E-Filing

The IRS has entered into several agreements with private companies to promote electronic filing:
  • The IRS contracted with VeriSign Inc., of Linthicum, Maryland, to conduct a test with IRS employees of a technology that will provide electronic signatures.

  • The IRS will conduct an electronic filing test using personal identification numbers (PINs) for taxpayers through Intuit (Mountain View, California), H&R Block (Kansas City, Missouri) and the National Association of Enrolled Agents (Gaithersburg, Maryland).

  • The National Association of Enrolled Agents (NAEA) will test a program designed to make it easier to become electronic return originators.

  • The IRS and Tax Refund Express (TRE), of Houston, Texas, will use letter solicitations to promote electronic filing to credit union members.

The IRS will not charge taxpayers for the credit card service. However, taxpayers will be assessed a convenience fee by the credit card service providers based on the tax amount charged.

The fees associated with electronic filing may deter some taxpayers, Ward said. "Our firm doesn't do a lot of electronic filing because most of our returns are complex ones."

"The people that do file electronically, however, now pay a fee to do so. They would have to pay an extra fee to use their credit card." The filing fee and the credit card fee together could easily total as much as $100, she said.

"Business-oriented CPA firms are not going to get excited about anything that is on the table now," said C. Eugene Prescott, former chairman of the AICPA's tax technology committee, concerning the new electronic filing services.

Prescott said the services would be an improvement for individuals with simple filings; however, businesses and individuals with more complex filings have little incentive to make the switch to filing electronically.

Required supporting documentation and the need to file some schedules on paper remain a barrier.

Michael E. Mares, immediate past chairman of the AICPA tax executive committee, addressed the difficulties that keep CPAs from embracing electronic tax return filing for most of their clients when he testified before Congress this summer:

  • Not all forms can be filed electronically.

  • White paper schedules, disclosures and elections cannot be attached electronically.

  • The required signature, Form 8453 (Jurat form), disrupts the normal processing of the tax returns in a CPA office.

  • The procedures for registration and the annual registration cutoff in early December are less desirable than a rolling acceptance date.

  • The registration is cumbersome for firms with multiple offices.

"It boils down to this," Prescott said. "As long as a paper version is necessary, doing both a paper and an electronic return is worse than making multiple copies of a paper return."


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.