Final regulations clear path for direct IRS card payments

The IRS finalized regulations (T.D. 10060) implementing changes made by the Taxpayer First Act that would allow taxpayers to make credit and debit card tax payments directly to the IRS rather than through third-party payment processors.

The regulations, issued Friday and scheduled for publication in the Federal Register on Monday, implement changes Congress made in the Taxpayer First Act, P.L. 116-25. Under prior law and regulations, the IRS generally relied on third-party payment processors and was prohibited from paying fees under contracts related to accepting credit and debit card tax payments.

The final regulations remove that prohibition on paying fees and allow the IRS to enter into contracts under which it pays processing fees, provided the agency fully recoups those costs from taxpayers using the payment method. Any reimbursement fee must be collected at the time of the tax payment and is not eligible for refund or credit under Sec. 6402, the regulations state.

The regulations allow the IRS to receive benefits available to other organizations that accept card payments, including guaranteed receipt of funds and reduced paper-check processing costs, the IRS said. The agency also said the change would allow taxpayers to make payments directly to the IRS by credit or debit card, such as by telephone, without being routed through third-party processors.

The final regulations adopt without change proposed regulations (REG-120137-19) issued in July 2024. Treasury and the IRS said they received eight comments on the proposal, most of which supported the changes. A public hearing was requested, but it was canceled because no one requested to speak at the hearing.

The regulations apply to tax payments and reimbursement fees made on or after the date the final regulations are published in the Federal Register.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.