True, at least with respect to Chase and its MP Visa card as of today, 2/28/09. It will not be true as of tomorrow, 3/1/09, for those whom Chase has targeted for a double miles pay-your-taxes offer. They will be able to pay a certain amount of their taxes and receive double miles for doing so, and after that certain amount (the cap), it will be no more bonus miles for additional taxes paid with the card.

Not so sure that is correct: http://boardingarea.com/blogs/viewfr...h-united-visa/

For the nth time: Tax payments have always been treated like a purchase, not as a cash advance.

The 2.49% fee makes the value of the miles somewhat questionable, unless you get a hefty bonus, or you get EQMs in the deal.

Well, for the nth + 1 time... When exp wondered aloud which card to use to pay taxes back on 2/27 (post #423), one of the possibilities he entertained was a Schwab card which gives a 2% cash rebate (I believe). The value of miles and points is debatable, varies from person to person, and is almost certainly worth less to the issuer than to the recipients; but the value of cash is its denominated value at any given time, and not subject to debate.

Does anyone know from personal experience or explicitly stated T&C how a cash-rebate card like the Schwab one works when it comes to tax payments, which entail a 100 cents on the dollar payment to the IRS, not a "discounted" amount to a merchant or service provider that has agreed to take less than 100 cents on the dollar as a cost of doing business? Not treated as a cash advance with the Schwab card, though they are going to return 2.001 of the 2.490 cents/$1 paid rather than miles or points?

Did you try that link? It doesn't work, at least not for me at this time. It did (or one like it did) at the beginning of February, but "closed" as of 2/13/09. Yesterday, I was told by a Chase rep that it would "open" back up today (3/1) for those who were targeted with the pay-your-taxes offer. Whether those who weren't targeted will be able to make tax payments with the Chase card and still receive bonus miles, I don't know. I think it would be best to inquire if one is uncertain in that regard, rather than wait months to find out whether they got 1 mile for each $1.0249 charged, or 2 miles for the same amount charged.

And about the 15K max of "bonus" miles with the Chase offer, my understanding per an email response from Chase is that all the miles received count as "bonus" miles. Thus, if one pays $7.5K in taxes plus the 2.49% "convenience fee," then they will receive the max permitted 15K "bonus" miles (plus about 1800 miles for the "convenience fee" charge); if they pay more than $7.5K in taxes, everything after the $7.5K is at the usual 1 mile per $1 charged, no double miles from that point on.

It worked for me yesterday & just now. I do get a Microsoft Certificate Error (with Internet Explorer), but I OK it & it shows fine....

Look, its a purchase, like any other purchase. You'll have two line items on your statement, one for your tax payment, one for the "convenience" fee. They are both treated as purchases (not cash advances). Officialpayments.com charges you the merchant fee (as a "convenience" fee) because by law they cannot pass the fee on to the government. I'm assuming that they have worked out a deal with Mastercard, Visa, Discover, and Amex and are paying them less than 2.49% they collect, but their business model is none of my concern. Also none of my concern is how the various card issuers decide to fund or finance their reward schemes for the purchases you make. Paying your taxes in this manner is no different that if you have bought a product, a vacation, or a meal.

Lots of people use credit cards to pay their taxes. Most people that do so, do so out of necessity - they don't have the cash on hand to pay. I say that because no one in their right fiscal mind would think that paying that extra 2.49% is a good deal.

Now, if you want to get into some esoteric conversation as to the benefits of using a 2% cash back card to cover a 2.49% fee, that's fine. If you have a Schwab card and are forced to pay your taxes with a card due to your economic circumstance, paying .49% is a hell of a lot better than paying 2.49%. But if you do have the cash, why on earth would you pay the exta .49%? In any event, Schwab will not discriminate a tax payment purchase from any other non cash advance purchase.

I'm not going to pretend to speak for the board, but I think that most people on Flyertalk are weighing using their cards to get miles, not cash. If you have a $15,000 tax bill and have to pay a $375 fee, using your card to pay that tax bill is slightly cheaper than buying those 15K miles directly from the airline. If there is a bonus and you'll get 30K miles for $375, then that might be worth considering, but only if you can use those 30K miles for a ticket that is more than $375. Still pretty dicey.

OTOH, if you have, say, a Delta Amex card and you're near a threshold that will get you 15K EQMs in addition to those 15K miles for making that 15K tax purchase, that becomes something to consider, especially of you're 15K short of getting say, Gold Medallion status.

But at the end of the day, unless there is some kind of bonus, its simply not a good deal to pay your taxes just to get the miles.

*nods* ....if anyone learns of OnePass (Continental) bonus please let me know :)

If you have know for a certainty that it is so with cash rebate cards (not those giving miles or points), then fine. If you are only speculating that is the case with cash rebate ones, though, you should make that clear to others. (Not a personal concern of mine, since my various cards are all miles or points, and I have experience of paying taxes with a Chase card giving miles, and an Amex giving points, neither of them treating the payment as a cash advance.)

Agreed, in general no one in their right fiscal mind would do so other than out of necessity. But there are a surprising number of people not in their right fisal minds, especially when it comes to the use of credit cards, and there are exceptions when for reasons other than necessity it might not be imprudent to pay taxes with a cash rebate card (see below).

Not all that "esoteric." If a card allows one up to 25 days or so to pay off their statement, and you can control when the charge posts and even set the date your statements will cut, then it shouldn't be hard to get a 45 or so days of float on your tax payment (e.g., pay taxes in time for 4/15, not pay credit card balance until end of May). For some, especially when interest rates are high, rather than low as they are now, 45 days of float may easily be worth .49 or .48% in after-tax savings. (The possibility of a big "float" is one reason that I question whether cash back cards handle these as "purchases," that is the same way the miles and points cards do. If you are correct, and you may be, then they do.)

Agree, unless it is when you need some miles to top off for an award and find it cheaper to get those miles through use of the credit card to pay taxes than through direct payment to the airlines for the needed miles. (Going the credit card route will mean a rather long delay in getting the miles, but one would pay a bit less and could get them in pretty close to the exact amount they were after, even if it was more than the max the airline will sell.)

Good for you! And thanks for telling us. I came to that warning page and went no further, in part because the link I originally used, a different one, now said it was deactivated as of 2/13/09 and a Chase rep told me it was done because the promo start date had not arrived and only those targeted would be able to avail themselves of the offer. Haven't gone back to check that other link that I used before, but no matter given that the one you have pointed us to appears to be up and working.

So, may we conclude that the offer is there for all Chase card holders? It looks like it, which is certainly a good thing. (Even though I expected to be able to take advantage of the offer, and planned to do so, I couldn't help but wonder if some might have been targeted for an offer that wasn't capped at only 15K "bonus" miles, or what I consider to be in reality 7.5K "bonus" miles and 7.5K "regular" miles of the sort we get with any purchase, any time.)

The FAQ says tax payments post as a purchase. Don't know what more you need than that.

What's interesting is that Costco only charges a 1.64% merchant fee (plus 20 cents per transaction), 1.99% for internet transactions. Again, how Schwab affords to rebate 2% is none of my business (maybe they are getting a cut of the interchange fees?). I think that The Schwab card will disappear after a while, like most 2% cards have disappeared.

I have not paid my taxes with a cashback card, because I know how to add. I'm also not interested in a dicey 45 day arbitrage when the market is dropping like a stone and most short term interest bearing accounts are paying in the .5% to 1% APR range. YMMV.

Just whether that's a Schwab or other cash-back card FAQ or one for AmEx or another card that gives miles or points.

Does Costco offer cards that give the user back cash, and if so, how much? If they don't, I fail to see the relevance here.

We know that when we make a tax payment of x with a charge card, the IRS (or other governmental authority) is going to net x, not .98x, or .97x, or .96x, or whatever it is that most others net when they accept credit card payments. The difference between x and x is 0.0, which allows nothing to cover the credit card issuer's considerable costs of doing business, let alone yield a profit. Hence, there is only the 2.49% "convenience fee" for the credit card issuer to divide somehow with officialpayments.com, which must get something out of the deal too. If the credit card issuer is rebating 2% of the charge to the credit card user, then there is less than half a cent on each dollar for the issuer and officialpayments.com, which seems improbable. So, not interested in "how Schwab affords to rebate 2%" on tax payments, but if in fact it does rebate that much when there is no "vigorish" in it, only the 2.49% that has to be shared with officialpayments.com.

Most insured accounts whether with banks, credit unions, brokerages, etc., are paying minimal interest on short term deposits these days. But that is not to say that some do not have the opportunity to earn more on their money even now, so that they could not be seeing an 8% before taxes return. And at other times, there might be more opportunities to do so. In any event, I am not suggesting that the way to riches is to try to squeeze out such small gains through interest arbitrage; my point is that for financial institutions "float" is consequential, and they usually don't arrange things so that the "float" works against them.

My point is that if you are a merchant using Costco as your credit card clearinghouse and a dude rolls in to your business and pays with a Schwab card, you as a merchant are not all-of-the-sudden going to pay more to clear that particular CC transaction. Therefore someone (Schwab) is making up the difference between what you paid for your costco based merchant fee (1.64%) and what Schwab are promising their customers for that rebate (2%). Just as they may or may not be making up the rebate for the Tax payment. In some cases its a money losing proposition for Schwab. I think they are doing it to get more customers on their brokerage side of their house. A loss leader. They can't keep it up forever, and I think at some point in the future, the 2% rebate on their card will be reduced to 1% like every other cash back card on the planet.

Now, You can pretend all you want that there is some hidden "2 tier" program where officalpayments.com is going to treat some cards as cash advances and isn't going to tell you about it. I know there isn't, because their FAQ says "they are treated as purchases."

At this point, I give up.

Does anyone know of any other bonuses out there?

Bullseyetax.com
 

Have anyone tried bullseyetax.com? The fee is a bit cheaper(2.25%) so I might pay with my OZ amex card, which gives you 2miles/every $. Not great, but not a bad deal with 1.13cent per mile..

edta450

Costco Credit Card Processing Fee Structure
 

Take a look at the fine print on the Costco website:

Rates listed are for qualified transactions. Reward cards process at a higher rate. Contact Elavon for details.

I don't own a business, but I'd bet that the Schwab Visa is treated as a "reward card" and that the credit card processing fee is somewhat higher than the quoted rate for qualifying transactions.