Update 11/19/22: ACI is now sending out $10 compensation to Paypal accounts which made a payment when there was a cash advance issue to compensate for any fees. Interestingly, some people who never got hit with any fees still got the $10 credit. (ht nurglefish)
Update 11/1/22: Two readers (1, 2) heard from Paypal that this issue has been fixed. We need corroborating data points of recent payments to that effect.
Original Post:
Multiple reports from the past month indicate that federal tax payments processed via ACI Payments using Paypal as the payment method will trigger a cash advance fee. While the tax payment itself will not be considered a cash advance, the fee – charged separately – is erroneously being considered as a cash advance. You’ll get hit with a cash advance fee and begin paying interest immediately.
A lot of people are getting hit by this now with Paypal being the Chase Freedom Q4 category. ACI and all other IRS-approved payment processors clearly state that no cash advance fee will be charged (ACI link). Yet with the (new-ish) Paypal payment option the service fee is erroneously being considered by the banks as a cash advance. (1, 2, 3)
You can instead use the payUSAtax processor who also allows Paypal as a payment option and has a slightly lower fee (see this comment). I haven’t yet heard of any reports of a cash advance issue when using payUSAtax. Please let us know if you have recent experience – positive or negative – when using Paypal via payUSAtax.
Hat tip to reader Harold
View Comments (72)
$10 showed up in my paypal account without any notification yesterday with the details:
$10.00 USD;PayPal Posting Date:Nov 18, 2022;Payment from:Paypal;Other Customer Info:ACI Payments, Inc.,mbox-ACI-IRSPaypalServiceFee@aciworldwide.com,6060 Coventry Drive,NE;Credit for card processing error. We apologize for any confusion, thank you for bei
Check your paypal account if you got hit with the fee I guess
@chucksithe
Thanks! Get $10 with the same details. I used ACI payment in September but not got hit with fee.
Does it mean that we can use ACI Paypal without worrying about the Cash Advance Fee now?
Personally I'd be confident using it with the presumption that all is fixed now
Same. It's the quintessential bank error in your favor.
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I got the $10 credit and I never even got hit with the cash advance fee. Not a bad deal!
Just made an estimated tax payment on Nov 8 using ACI & PayPal and I did NOT get hit with a cash advance fee. The service fee had the category "Professional services".
Careful. If you talk about PayPal and it isn’t true. They’ll steal $2500 from you. I can’t believe still consider PayPal as an option.
July: Paypal w/ Discover: ACI and PayUSATax, service charge coded properly, not a cash advance, no interest charge. Counted towards cashback match 5%+5%.
October: Paypal w/ Amex Business: Pay1040, service charge coded properly, not a cash advance, no interest charge, counted towards SUB.
Not sure when the cash advance issue referenced in the post happened (around or in between these DPs) but was not affected.
Still going to nuke the Paypal acct because of the $2500 wrongthink bs. As we all should.
The cash advance issue was with ACI payments in October. Your data points missed the window , so you got lucky.
@chucksithe tangentially related, would be great to have a data points thread about meeting Amex SUB and employee card bonuses with tax payments. I'm sure many of us will be thinking about it for the triple dip.
My own DP - tax payments counted toward SUB but were 50/50 on employee bonuses. Same payments all counted toward the SUB. Got 150k SUB and 20k for one employee but didn't get 20k points for one employee.
Happened to me as well. Completed Biz Plat spend on 4/19. Still fighting case with Amex reps.
Interesting, I hadn't been aware that tax payments are considered by Amex to be MS https://www.doctorofcredit.com/is-it-safe-to-manufacture-spend-to-meet-the-signup-bonus-spend-requirement/
@chucksithe DPs have been mixed. Some on reddit think that if everything goes without a hitch it'll work but if something goes wrong and you need a human to review it, Amex will deny it. I think there are a couple of comments with DPs under the current 170/160/150 business plat thread that could be worth compiling.
I can confirm that this happened to me on Amex Biz Platinum.
DP: I got hit with the CA fee along with interest fees on all 4 freedom cards I used via ACI. I secured messaged Chase yesterday and have received message back on all 4 accounts stating the following "As a valued cardmember, I refunded the cash advance transaction fee of $10.00 and $0.33 in cash advance interest fee. You will see this adjustments on your next billing statement."
I'm actually surprised they agreed to refund. I was pretty sure they wouldn't do it, but it didn't hurt to try"
This issue has been fixed. You can use ACI now without a cash advance fee.
How did you do 4 payments with ACI? Was this spread out over 2 quarters?
2 per spouse
They say you must use primary SS number.I have read about problems when using non primary SS
Yeah, I'm not daring enough to try that and risk having to call the IRS to get payments moved to the right account.
Good move. If you ever get through to them after waiting hours on hold, then you find out you can't talk about other person's account do to security reasons.
I did it in 5 minutes a few months ago. It's easy
STATE Real Estate Property Tax payment providers?? I'd like any recommendations for State and County Taxes. Seem like there should be multiple ways to make this work, and have it NOT be considered as a cash advance.
Used PayPal to send money…….their conversion rates were exceedingly high. I would avoid anything with PayPal.
no one should ever.....
I had a call with ACI and they indicated to me that they worked with Paypal and resolved this for transactions going forward, and will get back to me on how they will reprocess/refund these for previous transactions.
Hi @guest_1470242, Did you get back from ACI? Appreciated if you can update us.
I also see a $10 transaction fee on top. Anyone know what this is?
That's the cash advance fee discussed in this post