Bankcard Services for Free?
The new tax cut bill sounds great on paper: $152 billion saved by allowing Americans to pay taxes with credit cards. In reality, it has serious problems, because for now, it will require Visa and MasterCard (the Q of the Financial Services World) to do it for free.
If the IRS accepts your payment via credit card, they are acting as the merchant. But, the new law won't allow the government to pay the merchant fees. The IRS doesn't have an agreement with a bank and they're not likely to get one if the bank will not be compensated for their efforts.
It's pretty basic: Uncle Sam wants our money but he doesn't want to fork over any of his own.
The original draft of the Taxpayer Relief Act allowed the government to pay fees but somewhere in the negotiations, the fees were taken out. According to American Express, "To do business where a discount rate would not be allowed would be economically unfeasible for us." Citibank expressed similar sentiments calling the lack of fees, "...an economic equation that does not work." Discover differed, stating they were "...enthusiastic about the potential business opportunity for Novus."
Solution?
One option is to have the cardholder pay the fees, as is already done at some federal and state agencies. But, with the uproar over ATM fees in the House and Senate lately, it may not be as simple as that.
Another option is that the banks will agree to provide the free service. While it may seem obvious to us that credit card companies aren't about to provide services gratis, Kenneth Kies, Director of the Housing Committee on Taxation, feels that over time the banks might not be as tough as they are now. "I know they're saying that, but I think we're going to have to wait awhile to see whether they are serious or not."
Either solution, having cardholders pay the fees or relying on banks to provide free services, is pretty far-fetched. When it comes to taxes, that checkbook seems to still be number one
