Consumer Payment Card News

1040 Plastic

Americans may charge as much as $1 billion in federal taxes to their payment cards this year. Last season, Americans charged more than $536 million in federal taxes to personal MasterCards, American Express and Discover cards. This is the second year of the Internal Revenue Service electronic payment initiative. Two companies are now authorized by the IRS to accept credit card payments for income taxes, including Official Payments Corporation and PhoneCharge, Inc. Since users of the service are required to pay a service charge to cover the merchant fees, the primary incentive to charge taxes is convenience. The service charge of approximately 2.00% to 2.50% generally wipes out any rewards offered by the credit card issuer. Most issuers offer rewards that have a net value of 1.0% to 2.0% of the total transaction. However this year American Express and Discover are offering special incentives to some cardholders for tax charges. Discover is enticing consumers with a special, low, processing fee. Under a special deal with Quicken, Discover cardholders pay a 1.85% + $1.00 processing fee. For the third consecutive year, Discover Card is the exclusive credit card for paying taxes electronically via Quicken TurboTax and Quicken TurboTax for the Web. Discover cardholders can also purchase TurboTax Deluxe at a discounted price via Discover’s Web site. TurboTax for the Web allows Discover cardholders to prepare and file federal 1040 income tax returns online for $14.95 before April 1 and $19.95 after April 1. State returns are only $9.95. Taxpayers with an adjusted gross income of $25,000 or less qualify to use the service free of charge. Cardholders can pay taxes electronically with their Discover Card immediately after filing online and earn a Cashback Bonus award on federal taxes paid. For more information visit American Express is awarding double air miles to cardholders charging individual federal taxes this year. Under a special promotion, holders of Classic, Gold or Platinum Delta SkyMiles credit cards will earn double SkyMiles when they use their card to pay individual federal taxes from Feb 15-Apr 16. Corporate cardholders and holders of the Delta SkyMiles Options card will not be eligible for the extra miles. Participants in Membership Rewards will likewise not receive bonus points for tax payments.
For more information about the Delta SkyMiles Credit Card, consumers can call 1-800-SKY-MILE or visit To charge your taxes to a payment card, contact Official Payments Corporation (1-800-2PAYTAX or or PhoneCharge, Inc. (1-888-ALL-TAXX or

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