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Friday, April 8, 2016

Pay your taxes in cash at 7-11 - start of even better things to come?

One of the ways individuals and businesses can pay their federal taxes if they don't want to do so or cannot do so via automatic bank withdrawal, credit card or check is to go to their local 7-11 store and pay by cash. Per the IRS instructions, the fee is $3.99 and there are some actions that need to be taken online before going to 7-11. That action includes entering your Social Security number. You then get a number to take to 7-11 to complete the transaction. The cash limit is $1,000. [Also see IR-2016-56 (4/6/16)]
This should be helpful to someone without a credit card or bank account but who does have access to a computer and the Internet (school or local library at least).

I think this is a great idea.  I think it would be even better to evolve to a system that should work for over 50% of individuals to have the IRS use the information they have to compute the taxes owed or to be refunded.  If we got rid of more deductions and credits (and lowered the tax rate), this would work for even more individuals.  You could then have a secure PIN that you could use at your own computer or ones available at local IRS offices, libraries, or other government offices to complete your return and direct any refund to where it should go (including cash that could be given out at the office right then) or let you pay.  Better yet, someday when more of our transactions are electronically recorded in a secure manner, tax withholding could be monitored and regularly adjusted so that there would be no significant refund or amount owed or could just be rolled to the next year.  The technology exists, it just needs to be more comprehensive in its use  -  more networked with the reality and perception of the greatest level of security and accuracy.

Yes, I know there is controversy about having the IRS prepare returns.  I think that is unfortunate because with about 2/3 of individuals claiming the standard deduction (rather than itemizing) and many folks not having a Schedule C business or rental income or capital gains, the IRS does have the information to prepare the return. Why should a taxpayer struggle on their own to complete the return or pay someone hundreds of dollars to get a simple return prepared?  Some say you can't trust the government, but we are talking about simple calculations and the IRS can easily do this correctly.  And, individuals would get their completed return to say yes or no to before filing.  Guess what - this is the way it is in many countries today. The GAO issued a report on this way back in the 20th century (1996)!

What do you think?

fyi - The IRS has more information on other payment options here.

1 comment:

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