Back on Jan 20, 2000, Dick made a post (submitted by someone
else, and modified by him) indicating that, when a credit
card was used to pay someone's taxes, there was a fee.

I can't find any follow-up to that post.

Is the fee schedule still in affect, or has it been removed?

Thanks,

Art

> Back on Jan 20, 2000, Dick made a post (submitted by someone
> else, and modified by him) indicating that, when a credit
> card was used to pay someone's taxes, there was a fee.

The service fee that is imposed by the cc company is paid by
the taxpayer.
 
Helen, EA in PA
Member of NAEA, NATP and the Tax Gang
Newest Member  to the Electronic Tax Admin. Advisory Committee (ETAAC)

"Art" <TheDabblerNOSPAM@worldnet.att.net> writes:

> Back on Jan 20, 2000, Dick made a post (submitted by someone
> else, and modified by him) indicating that, when a credit
> card was used to pay someone's taxes, there was a fee.
>
> I can't find any follow-up to that post.
>
> Is the fee schedule still in affect, or has it been removed?

It's still in effect.

Phil Marti
Topeka, KS

> Is the fee schedule still in affect, or has it been removed?

You can call The Official Payments Corporation (OPC) at
1-888-272-9829 for information on the credit card fee.

> Back on Jan 20, 2000, Dick made a post (submitted by someone
> else, and modified by him) indicating that, when a credit
> card was used to pay someones taxes, there was a fee.
>
> I cannot find any follow-up to that post.
>
> Is the fee schedule still in affect, or has it been removed?

The tax collector does not impose any fee as far as I know.
What happens is the credit card company treats it not as a
credit purchase but as a cash advance.  Cash advances are
subject to more aggressive fees, charges and rates at your
credit card end, starting up front with no payment gap
period.  These are generally very high rates--and not
deductible unless you card is secured by your house which is
very unusual.

In many cases the promos offered by the card companies do
NOT apply to cash advances. Read your fine print.  In some
particular cases they do, hence some are willing to put
large bills on the card just for the airmiles etc.  But in
general you wind up paying about 20% interest on the
convenience of such card payments.    Your Call.

The Dabbler wrote:

> Is the fee schedule still in affect, or has it been removed?

I should have also  mentioned that you can find the fee schedule at:

http://www.officialpayments.com/fees/fees_fed.html

Does anyone know if the convenience fee charged by Official
Payments is tax deductible?

Contrary to a previous posting, the fee IS charged as a
regular purchase.  The fee IS imposed by the collector, at
2.5% of the payment.

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> Does anyone know if the convenience fee charged by Official
> Payments is tax deductible?

Nope.  Credit card fees are not deductible.

Helen, EA in PA
Director, NAEA; Member of The Tax Gang
President, PA Society of Enrolled Agents

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Helen P. OPlanick EA wrote:

>> Does anyone know if the convenience fee charged by Official
>> Payments is tax deductible? 
> Nope.  Credit card fees are not deductible.

Now let me see if they are paid to facillitate payment of a
tax they are not?  Does this seem correct? 
 
Appraisals are not deductible, but if they are paid to
determine an estate tax liablity they are.

--
Frederick E. Jorden, Tax Accounting & Payroll
10049 Midlothian Tpk;  Richmond, VA 23235; EMAIL knowtax@bigfoot.com
(804)320-6210 FAX (804)320-6211

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> Now let me see if they are paid to facillitate payment of a
> tax they are not?  Does this seem correct?

You are not paying tax, you are paying a fee (similar to
interest) and interest is not deductible.

Helen, EA in PA
Director, NAEA; Member of The Tax Gang
President, PA Society of Enrolled Agents

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>> Nope.  Credit card fees are not deductible. 
> Now let me see if they are paid to facillitate payment of a
> tax they are not?  Does this seem correct?
>
> Appraisals are not deductible, but if they are paid to
> determine an estate tax liablity they are.

And your analogy of an appraisal is akin to tax return
PREPARATION.  When you pay your tax with a credit card, you
already know what your tax is.

David M. Woods, EA, MST, ChFC
(617) 723-2422
Boston, MA
www.rytercpa.com
dwoods@rytercpa.com

This advice does not constitute a client relationship.
If you are not a client, you are on your own.

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David Woods EA MST wrote:

>>> Nope.  Credit card fees are not deductible. 
>> Now let me see if they are paid to facillitate payment of a
>> tax they are not?  Does this seem correct?
>>
>> Appraisals are not deductible, but if they are paid to
>> determine an estate tax liablity they are. 
> And your analogy of an appraisal is akin to tax return
> PREPARATION.  When you pay your tax with a credit card,
> you already know what your tax is.

But payment by credit card does mitigate some problems
associated with providing proof of payment when the IRS says
the tax was not paid. Additionally, use of credit cards that
are tied to investment accounts may be investment expenses.
We are not talking about the interest on the card balance
but the fee paid to use the card to pay the tax. Since many
penalties are calculated as a percentage of unpaid taxes use
of the credit card could reduce those penalties if the
taxpayer did not have a large enough collected bank account
balance to cover the required tax payment. I think the IRS
is picking the wrong battle. Most business have found it a
good idea to do little things to encourage payment.

--
Frederick E. Jorden, Tax Accounting & Payroll
10049 Midlothian Tpk;  Richmond, VA 23235; EMAIL knowtax@bigfoot.com
(804)320-6210 FAX (804)320-6211

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barry@soon.com (Barry Graham) writes:

> Does anyone know if the convenience fee charged by Official
> Payments is tax deductible?

I'm not aware of any specific guidance about this.  I think
you could make the case that it's part of your cost of tax
preparation and include it as a Schedule A miscellaneous
itemized deduction subject to the 2% of AGI exclusion.

Phil Marti
Topeka, KS

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philmarti@aol.com (Phil Marti) wrote:

> I think
> you could make the case that it's part of your cost of tax
> preparation and include it as a Schedule A miscellaneous
> itemized deduction subject to the 2% of AGI exclusion.

I wouldn't consider fees associated with paying your tax to
be a cost of the preparation of the return.

David M. Woods, EA, MST, ChFC
(617) 723-2422
Boston, MA
www.rytercpa.com
dwoods@rytercpa.com

This advice does not constitute a client relationship.
If you are not a client, you are on your own.

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Phil Marti <philmarti@aol.com> wrote
 
> I'm not aware of any specific guidance about this.  I think
> you could make the case that it's part of your cost of tax
> preparation and include it as a Schedule A miscellaneous
> itemized deduction subject to the 2% of AGI exclusion.

But it's not the cost of tax preparation, but of tax payment.

--
Paul A. Thomas, CPA
Athens,  Georgia
taxman@negia.net
http://www.pat-cpa.com

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"Barry Graham" <barry@soon.com> wrote:

> Does anyone know if the convenience fee charged by
> Official Payments is tax deductible?

2001 SCA LEXIS 6; SCA 200115032

200115032, April 13, 2001, Released

Significant Service Center Advice

February 12, 2001

REFERENCE: CC:IT&A:2, TL-N-6345-00, UILC: 212.18-00

TEXT:
INTERNAL REVENUE SERVICE NATIONAL OFFICE SERVICE CENTER ADVICE

MEMORANDUM FOR PENNSYLVANIA DISTRICT COUNSEL

ATTENTION: DAVID A. BREEN

FROM: Heather Maloy by George Baker

Associate Chief Counsel (Income Tax & Accounting)

CC:IT&A

SUBJECT: Significant Service Center Advice

This responds to your request for Significant Advice dated
November 14, 2000, in connection with a question posed by
the Centralized Quality Review Site in Philadelphia.

ISSUE

Whether an individual may deduct a fee charged by a credit
card company for using a credit card to pay the individual's
personal income taxes due.

CONCLUSION

We conclude that no deduction is allowed under § 212(3) for
a fee charged by a credit card company for using a credit
card to pay the individual's personal income taxes due;
rather, the fee should be considered as a nondeductible
personal expense under § 262.

FACTS

Section 6311(d)(2) provides that the Secretary may not pay
any fee or provide any other consideration under any
contract for the use of credit, debit, or charge cards for
the payment of income taxes.

Section 301.6311-2T(a) of the Temporary Procedure and
Administration regulations provides that internal revenue
taxes may be paid by credit card or debit card as authorized
under these regulations. Section 301.6311-2T(e) provides
that the government may not impose any fee or charge on
persons making payment of taxes by credit card or debit
card. This does not prohibit the imposition of fees or
charges by issuers of credit cards or debit cards or by any
other financial institution or person participating in the
credit card or debit card transaction. You state that
customer service representatives receive many taxpayer
inquires concerning the deductibility of this fee.

DISCUSSION

Section 212(3) of the Internal Revenue Code provides that in
the case of an individual, there shall be allowed as a
deduction all the ordinary and necessary expenses paid or
incurred during the taxable year in connection with the
determination, collection, or refund of any tax.

Section 212-1(l) of the Income Tax Regulations states that
expenses paid or incurred by an individual in connection
with the determination, collection, or refund of any tax,
whether the taxing authority be Federal, State, or
municipal, and whether the tax be income, estate, gift,
property, or any other tax, are deductible. Thus, expenses
paid or incurred by a taxpayer for tax counsel or expenses
paid or incurred in connection with the preparation of the
taxpayer's tax returns, or in connection with any
proceedings involved in determining the extent of the
taxpayer's tax liability, or in contesting the taxpayer's
tax liability are deductible.

Although the legislative history concerning § 212(3) is
brief, S. Rep. No. 1622, 83rd Cong., 2d Sess. 218 (1954)
provides that subsection 3 of Section 212 is designed to
permit the deduction by an individual of legal and other
expenses paid or incurred in connection with a contested tax
liability whether the contest be Federal, State, or
municipal taxes, or whether the tax be income, estate, gift,
property, and so forth. Any expenses incurred in contesting
any liability collected as a tax or as a part of the tax
will be deductible.

Section 262 provides that except as otherwise provided for
in this chapter, no deduction shall be allowed for personal,
living, or family expenses. Section 1.262-1(b) further
provides some examples of personal, living and family
expenses such as (1) premiums paid for life insurance by the
insured, (2) cost of insuring a dwelling owned and occupied
by the taxpayer as a personal residence, and (3) expenses of
maintaining a household.

We have not found any precedent that we believe dictates a
specific conclusion on this issue. Consequently, we are left
to draw inferences from the statute, its history, and the
following principles derived from certain precedents.

In Rev. Rul. 89-68, 1989-1 C.B. 82, the Service concluded
that fees paid for the preparation and submission of a
ruling request concerning the deductibility of a medical
care expense, and the user fee paid in connection with the
ruling request, were paid in connection with determining the
extent of the individual's tax liability deductible under §
212(3). Although not discussed, this revenue ruling makes
clear that the deduction of an expense under § 212(3) for
determining the extent of the taxpayer's personal liability
for income tax is allowed even if the liability so
determined does not arise in connection with any trade or
business, or income producing activity, of the taxpayer.

The analysis in Rev. Rul. 58-180, 1958-1 C.B. 153, is
instructive. That revenue ruling considered whether § 212(3)
permitted a deduction of a fee for an appraisal to establish
a casualty loss sustained by residential property as a
result of subsoil shrinkage due to a prolonged drought. The
ruling first noted that a prior revenue ruling established
that such a loss constituted a casualty loss but that the
taxpayer had to prove both that the loss resulted from
subsoil shrinkage and the amount of the resulting loss. The
ruling then concluded that an appraisal fee to establish the
deductible casualty loss was deductible under § 212(3).

Luman v. Commissioner, 79 T.C. 846 (1982) is also
instructive. The taxpayers sought to deduct $ 20,000 paid
for documents used to create a family trust to ensure the
orderly transfer of assets to their children. Although the
payment entitled them to advice from a lawyer and a CPA, no
legal or accounting advice was sought in the year of
payment. Further, the taxpayers conceded that tax
considerations did not influence the decision to create the
family trust. As no part of the fee was shown to be related
to determining the extent of any tax liability, the Tax
Court found no basis for allowing a deduction under §
212(3).

Based on the foregoing authority, Congress intended to allow
a deduction to an individual in connection with determining
the extent of the tax liability or in contesting the tax
liability. It is our opinion, however, that this authority
does not support a broader interpretation of § 212 to allow
a deduction for the expenses involved in paying that
liability after its extent has been determined.

Once the full extent of the taxpayer's liability is
determined, the obligation to pay that liability does not
depend on the nature of the income giving rise to it.
Further, the taxpayer may discharge that liability using any
assets the taxpayer personally controls, again, without
regard to the nature of the income giving rise to the
liability.

The payment of the liability cannot further affect the
determination of the extent of the taxpayer's liability.
Consequently, the approach in Rev. Rul. 58-180, that of
first finding a necessary component of determining liability
and then allowing deduction of a fee paid in connection with
resolving that necessary component of liability, does not
support deductibility of the credit card fee. Like the fee
in Luman, the credit card fee should be viewed as incurred
in a transaction unrelated to determining the extent of the
taxpayer's liability.

We think the expenses of paying one's liability fall outside
the scope of section 212(3). Thus, we feel that the payment
of a credit card fee should be considered as the payment of
a nondeductible personal expense similar to the personal
expenses that are not deductible by reason of § 262.

If you have any additional questions, please contact George
Baker at (202) 622-4920.

=============

Barney Byrd
barney_bird@msn.com

To respond to me personally, use the correct spelling of my
last name in the above e-mail address.

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Is the above a revenue ruling, proposed regulation,
regulation or just plain opinion.

Frederick Jorden <fejcpa@erols.com> wrote:

> Is the above a revenue ruling, proposed regulation,
> regulation or just plain opinion.

It was a Service Center Advice--as such, it basically
represents the opinion of the signing counsel about the law.
Obviously, it's not binding on the courts <grin>, though it
does provide an outline of the som IRS thinking on the
topic.

Reading it that way, it appears to say there's not an
absolutely clear answer to this one in the attorney's view,
but that he concludes the personal expense angle would
arguably block the deduction.  Obviously, other conclusions
are possible.

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"Frederick Jorden" <fejcpa@erols.com> wrote:

> Is the above a revenue ruling, proposed regula-
> tion, regulation or just plain opinion.

The SCA represents internal legal advice furnished by IRS
counsel upon request of an IRS service center official.
Until about three or four years ago, IRS treated such advice
as a privileged internal communication which was exempt from
public disclosure.  Following a FOIA suit (by Tax Analysts I
believe), IRS abandoned its privilege argument and agreed to
publicly disclose most internal counsel opinions.  Opinions
furnished to service center employees are called Significant
Service Center Advice (SCA).  Other counsel opinions are
labled Field Service Advice and Chief Counsel Advice.  It's
my understanding that all of them are the legal equivalents
of private letter rulings, meaning pursuant to IRC § 6110(k)
they cannot be cited as precedent.  So in the food chain of
legal authority, SCAs are inferior to revenue rulings but as
published advice, put an IRS legal opinion on record for a
given issue.

Barney Byrd
barney_bird@msn.com

To contact me personally, use the correct spelling of my
last name in the e-mail address above.

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> Does anyone know if the convenience fee charged by Official
> Payments is tax deductible?
>
> Contrary to a previous posting, the fee IS charged as a
> regular purchase.  The fee IS imposed by the collector, at
> 2.5% of the payment

Without looking, I'd say no.  No more so than the tax itself
is deductible.

David M. Woods, EA, MST, ChFC
(617) 723-2422
Boston, MA
www.rytercpa.com
dwoods@rytercpa.com

This advice does not constitute a client relationship.
If you are not a client, you are on your own.

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Barry Graham <barry@soon.com> wrote

> Does anyone know if the convenience fee charged by Official
> Payments is tax deductible?

Not by an individual taxpayer.

> Contrary to a previous posting, the fee IS charged as a
> regular purchase.  The fee IS imposed by the collector, at
> 2.5% of the payment.

Why should that make the fee tax deductible?

--
Paul A. Thomas, CPA
Athens,  Georgia
taxman@negia.net
http://www.pat-cpa.com

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Barry Graham <barry@soon.com> wrote:

> Does anyone know if the convenience fee charged by Official
> Payments is tax deductible?

My guess would be "no". It sounds like a cost associated
with obtaining a loan. And, since a loan to pay income tax
would be "personal" in nature, no deduction is allowed for
related interest.

MTW

Please reply to newsgroup - email address is munged.

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