Near a 7-Eleven? Pop in, pick up a Slurpee and pay your IRS tax bill in cash … but plan ahead and be careful
Nearly 10 million households didn't have bank accounts in 2013, according to the latest survey of individuals' banking habits by the Federal Deposit Insurance Corporation (FDIC).
That's a lot of folks for whom cash is king.
That's also a lot of people for whom paying a federal tax bill is not that easy … until now.
Taxpayers who want to pay their Internal Revenue Service bills in cash now can do so at some 7-Eleven stores.
Tax cash: As I noted last week at my other tax blog, the 7-Eleven cash tax payment option is available thanks to an arrangement between the Internal Revenue Service, Official Payments and the PayNearMe company.
And as I also discussed over at Bankrate Taxes Blog, it's not exactly as simple as heading to your local convenience store, ordering a Slurpee and then when you pay for your icy treat also handing over some extra cash to cover your federal tax bill.
You start the cash payment process online at the IRS' payments web page, where you'll click on the cash payment option link, which will take you to another IRS page that details the process and directs you to the Official Payments' website.
Then Official Payments, which many folks already use to make their credit and debit card tax payments, and the IRS must verify that you are indeed you.
Once that's done, PayNearMe, the company that's responsible for getting your money from your local 7-Eleven to the IRS, will email you a code. That number, which you can print out or save on your phone, is required in order to make your cash tax payment.
So if you're thinking of paying your taxes in actual dollars, you might want to start the process now.
Plus, there are some limits -- three big ones to be precise -- on the paying your federal taxes in cash.
Limited payment points: Although the IRS touts the cash payment option as nationwide, it's available in only 34 states. You can't pay in real dollars at 7-Eleven stores in Alabama, Alaska, Arkansas, Georgia, Hawaii, Louisiana, Minnesota, Mississippi, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Tennessee or Wyoming.
And even if you are in state where the convenience store chain accepts cash tax payments, not every store participates. PayNearMe provides an online search tool to help you a 7-Eleven that will take your tax cash.
Limited time to make the payment: The payment code is good for only seven days. If you let it expire, you have to restart the process.
Limited amount you can pay: The maximum you can pay in one cash transaction is $1,000. If you owe more than that, be prepared to go through the cash payment steps until you pay all that's due Uncle Sam.
Still, if you don't have a bank account or a credit card with which to pay your tax bill, this cash payment option could be just what you need.
Cash payment concerns: Personally, I'm not a cash person. I prefer paying with a credit or debit card, or electronically transferring money.
I realize, however, that a lot of people don't have the luxury of having a bank account, and given some banks' fees, it is a luxury, or access to plastic payment options.
And I applaud the IRS for exploring ways to help make dealing with the agency easier for those folks without bank accounts.
But I have some concerns about this cash payment process.
First, there's the possibility of theft. Will crooks case 7-Elevens to watch for people making cash tax payments that are larger than what's usually spent on a frozen beverage and snacks? This could pose a problem for taxpayers and store clerks.
Then there's the opening for yet another tax phishing scam. The IRS is aware of this possibility and warns in its announcement of the cash payment program:
Watch out for email schemes. Taxpayers will only receive an email from OfficialPayments.com or PayNearMe if they have initiated the payment process. The IRS reminds taxpayers who haven't taken this step to be watchful of any emails they receive saying there are tax issues involving the IRS or from others in the tax industry.
So pay with cash if it is the best way for you to fulfill your tax responsibilities. Just be careful in doing so.
I'm talking about folks who have bank and other financial accounts. Lots of them. And some accounts in other countries.
Those offshore accounts were the focus of attention last week when a massive batch of leaked financial documents from the Panama-based law firm Mossack Fonseca. Dubbed the Panama Papers, the 11.5 million pages of documents were delivered to the International Consortium of Investigative Journalists (ICIJ), which passed them along to its network of international media partners.
Named in the documents are many well-known global leaders with foreign accounts allegedly established by Mossack Fonseca. And the United States is among the countries housing these accounts.
Remember, just putting your money in an establishment in another country is not in any way proof that you're breaking your nation's tax laws. But lots of folks are coughing like crazy because of all the smoke from this possible global tax evasion fire.
I usually post my additional tax thoughts over at Bankrate on Tuesdays and Thursdays. If you miss them then and there, you can catch highlights here at the ol' blog the following weekend.
I cut it a bit close this weekend, but just like the tax-filing deadline, as long as I make it by midnight, it counts!
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