Posted by Chuck on June 14, 2017
Manufactured Spending

Published on June 14th, 2017 | by Chuck

42

Visa Gift Cards No Longer Work for Tax Payments with OfficialPayments

Quick tip for those who use Visa gift cards to pay their taxes: OfficialPayments, one of the tax payment processors, is no longer processing any type of Visa gift cards as debit cards.

Some people like to liquidate Visa gift cards by paying taxes with them. The fee is around $2.50 per card. The issue is that you can only make two tax payments per quarter per payment processor.

To get around this problem, some people use OfficialPayments since they allow wrapping multiple Visa gift cards into one payment when calling in and making the payment over the phone. Though the $2.25 fee remains for each card separately, it pushes the amount of Visa gift cards to an unlimited amount so long as all are processed during a single phone call.

Numerous Flyertalk members report that the system now rejects all sorts of Visa gift cards as payment. Presumably, they’d be able to process as credit, but that has a much higher fee.

The issue is exclusive to OfficialPayments as of now. Other processors still accept Visa gift cards as debit; as noted, there is the two-payment limit.

[READ: A Complete Guide To Paying Your Federal Taxes With A Credit Card]

It’s interesting that this crops up right after Visa told Plastiq that they can’t make mortgage/rent payments, though it’s likely unrelated since the OfficialPayments issue affects debit only, presumably.

Hat tip to reader Testing



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42 Comments on "Visa Gift Cards No Longer Work for Tax Payments with OfficialPayments"

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Ferris
Ferris

Paying taxes costs 1.87%. I’m not sure I see the point in spending a bunch of time purchasing $500 GCs to save 0.67%.

Calwatch
Calwatch

Unless you want to take advantage of VGC bought at drug store. I might try MCGC for these instead. It avoids the post office mess or KIVA time.

Eric
Eric

What do you mean by “post office mess”?

calwatch
calwatch

VGC bought at CVS is easy to unload with postal money orders, but you might go postal doing so, with the lines and the occasional overzealous clerk.

deerseason
deerseason

I can confirm OfficialPayments not working. I used Pay1040, which is slightly more expensive at 2.59/card, and still worked.

Bought 500 VGC at CVS for 505.95 using Freedom, netting 2530 UR. Paid 497.41 in taxes at a cost of 8.54. I think that translates to a profit of about 4cpp, still pretty good.

Yu
Yu

Can I know when you used VGC to pay at Pay1040.com most recently?

Did you choose the charge type by yourself or was it determined by the site?

Thanks

deerseason
deerseason

I did it last night, about 13 hours ago, literally minutes after unsuccessfully trying to use OfficialPayments.

It determined the card type automatically, so just make sure you subtract the debit card fee from your payment so it drains fully.

Also remember that online the site will only allow 2 payments per quarter, so make sure you can cover your entire estimated tax payment with 2 cards. I’ve never called on the phone so I can’t confirm how easily you can circumvent it through the phone.

Yu
Yu

I may not owe IRS any money after my payroll deduction from each payment. I just want to offload those VGCs I bought for meeting the CC open requirements. I guess it doesn’t hurt to pay IRS via 1040ES every quarter even if I don’t owe it, right?

deerseason
deerseason

This is a concept that has been offered many times for people as an MS option… Taken as is, you’d get that money back as a refund next year, sometimes with interest, plus the rewards/bonus of course.

I haven’t seen enough clear datapoints either way about whether or not this can raise IRS eyebrows. They might think, if your income is relatively stable year-to-year and you usually get a refund/even out via payroll taxes, then why would you need to be paying estimated taxes?

Again, I haven’t heard one way or the other about the impact of this, and I’m a freelancer so I have to pay estimated taxes anyway. I’m also not heavy enough into MS for it to matter.

If this is something you want to do, you might be better off lowering your withholding so it would make sense to the IRS for you to pay Estimated Taxes. Plus that increases your take-home pay.

Yu
Yu

Did you try PayUSATax.com?

deerseason
deerseason

No, sorry. I’m not in any particular rush to offload the card. Let us know if it works for you!

For what it’s worth even if the payment applies to the 2nd quarter, I don’t think the IRS would be too worried if you put it in your return as part of Q3. I think all they really care about is that your cumulative tax payments by the time each quarter due date comes around is what it’s supposed to be by that point. So if you owe $3,000 per quarter, you could pay $6,000 in q2 and skip q3. Hell, I bet they’d love getting their money early 🙂

(Disclaimer: I am not a tax professional)

Yu
Yu

Hi Deerseason,
If I made two payments on 6/15, can I pay again now for 3rd quarter?

Thanks.

Deerseason
Deerseason

I don’t know yet. Id like to know too, i just bought another 500 vgc for the same purpose. I’ll probably wait until 7/15.

Jeff H
Jeff H

In prior quarters, I did two $500.00 GC in Official payments plus a $500.00 GC into one of the other tax payment processors thereby doing estimated tax payments of $1500.00 less fees.

Deerseason
Deerseason

This is correct. You shloild be able to do 6 payment sources per quarter online via the 3 payment processors. One of the processors will even allow you to make 2 payments more frequently than just once per quarter, but I can’t remember which one, and exactly how often. I think it was payUSAtax, and iirc it reset after about 6 weeks (maybe as little as a month). Worthwhile if you want to basically pay your estimated taxes monthly.

Yu
Yu

Thank you.
If I choose form 1040 series in the 2nd dropdown, in the next dropdown (tax form option), why do I only see Current Tax Return Year – 2016? Shouldn’t it be 2017?

Sorry I am new to this. Thanks

Yu
Yu

Thank you

deerseason
deerseason

You want to choose 1040-ES (estimated payments). You should be able to choose 2017 then.

Jeff H
Jeff H

Any idea when that started? I was successful to the IRS and my state Department of Revenue 2017 estimated payments on 05-29-2017 as well as one IRS estimated on 05-28-2017.

MonetaryDragon
MonetaryDragon

I had a VGC declined at OfficialPayments on May 20, 2017. I then drained that VGC successfully at Pay1040 on May 21, and then drained a Bancorp OneVanilla VGC at payUSAtax on May 22. My latest successful use of a VGC at OfficialPayments was on April 1.

deerseason
deerseason

Flyertalk posts indicated as early as June 6.

tsarcasm
tsarcasm

I still think this is linked to the Plastiq debacle because I believe VGC are what got VISA mad at Plastiq, not credit cards but it was easier for VISA to blanket ban anything with their logo on it.

NinjaX
NinjaX

and in future news, JPM Chase has identified and shut down INK 5x Office rampant abusers purchasing cash equivalents via a new FR sting operation (w/ guidance from industry veterans Keith & Kristie)…

Ed
Ed

With spending caps already in place, they’ve pretty much thwarted “heavy abusers”. Instead they seem to look at individual risks. So far, they’ve been a good institution for me and my business and I’m careful not to take that for granted. I stay within limits, don’t cycle limits (what’s the point with yearly caps) and use UR points within the rules.

NinjaX
NinjaX

im sorry to say but that exact flawed argument has been mentioned many times from naive MSers.

“cap is to prevent abusers. as long as youre under that, then youre OK.”

thats a terrible mentality and will get your accounts shut down, but at least you are still careful so youre probably fine.

Gary
Gary

I tried to pay my estimated taxes at both Official Payments and Pay1040.com and both payments were denied. PayUSAtax worked for two payments. I called the debit card company and asked why the payment was rejected and the CSR indicated it was because the charge came in as a recurring payment. They suggested that I call Official Payments and ask that the charge be placed as a one time charge instead. FWIW, it’s been known that CSRs don’t necessarily have complete information. 😉 I wonder if using the phone payment system would work??

deerseason
deerseason

Pay1040 worked for me last night with Metabank VGC. Official Payments did not, and I did not use PayUSAtax.

(I also used Official Payments with a CC with no problem)

Wil
Wil

Anyone used pay1040 via Visa GC successfully?

Wil
Wil

Anyone used pay1040 via Visa GC successfully today(6/14)?

calwatch
calwatch

I just used it for a $497.41 payment.

Dan
Dan

Does anyone have DP on paying tax via VGC in the last several days? Which site is still working?

MonetaryDragon
MonetaryDragon

I just made a Federal tax payment with a VGC using PayUSAtax.com. All indications are that Pay1040 is working for VGCs also.

MonetaryDragon
MonetaryDragon

Has anyone has success using a MasterCard gift card at OfficialPayments recently? Is the VGC shutdown limited to VGCs, or are MGCs affected too?

MonetaryDragon
MonetaryDragon

I can finally report that MasterCard gift cards still work at OfficialPayments. I just drained one that I got from the Giant 4X gas points promotion.

Kig
Kig

Just used a Bancorp Vanilla MCGC at OfficialPayments successfully.

Jeff H
Jeff H

Using Official Payments for 2017 estimated income tax payment:

10-06-2017 Nebraska Department of Revenue Individual Income Tax $495.05 Walmart VCG
Greendot debit Visa

09-01-2017 Nebraska Department of Revenue Individual Income Tax $500.00 Discover IT

rfclub
rfclub

Just tried today.

One Vanilla Visa prepaid: tried twice, both failed.
US Bank MCGC: first time failed, 2nd time success.

Curtis
Curtis

Successfully used Green Dot VGCs from Walmart to pay via Official Payments just now.

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