Paying income taxes by credit card is now free with MasterCard

By Ben Woolsey

Only in the past few years has the convenience of paying with credit cards extended to the process of paying state and federal income taxes. This service was launched by a company called Official Payments Corporation after many years of lobbying the IRS to accept payments through the nation's existing credit card infrastructure. Multiple companies now offer this service, including Link2Gov.com.

The only downside of this new process involved the cost that was incurred by consumers, typically 2.49 percent of the tax payment amount. This cost came about because the federal government, acting as a merchant in this case, is mandated by law to collect 100 percent of the tax owed and can not accept a discounted amount (as do normal merchants). Therefore, this convenience fee is put back onto the shoulders (or wallets) of consumers.

But, not to miss an opportunity to differentiate itself, MasterCard has launched a promotion that will make paying 2005 state and federal income taxes with a MasterCard debit card fee free and will rebate the credit card convenience fee if a MasterCard credit card is used. To qualify, consumers must purchase H&R Block's Online Tax Program and pay online through the PAY1040 hyperlink.

For those not wishing to purchase H&R Block's Online Tax Program, a special promotional fee of 1.99 percent has been arranged by MasterCard when consumers use Official Payments Corporation to pay taxes online using a MasterCard product.

Either way you choose to go, paying taxes online with a credit card should be less taxing this year. If you are interested in applying for a new MasterCard credit card through one of our banking partners please click on the MasterCard link in the left navigation area of our website to see a complete listing

Published: March 24, 2006

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