How to Pay Your 2016 Corporate Tax Using a Credit Card

Why Use a Credit Card for 2016 Corporate Tax?

Paying corporate tax with a credit card can free up cash flow, earn rewards, and simplify bookkeeping if the payment platform integrates with accounting software. The main trade‑off is the processing fee, typically 1.5%–3% of the amount, which must be weighed against any benefit the card provides.

Official Payment Channels That Accept Credit Cards

The IRS does not accept credit cards directly, but several authorized third‑party processors handle corporate tax payments on its behalf. The most common are:

• PayUSAtax
• Pay1040
• Official Payments (formerly Official Payments, Inc.)

Each processor requires the employer identification number (EIN), the tax form reference (Form 1120 for C‑corporations, Form 1120‑S for S‑corporations), and the exact amount due.

Step‑by‑Step Payment Process

1. Gather Required Information

Before you begin, have the following on hand:

• EIN
• Tax form and line‑item amount (e.g., total tax liability from Form 1120, line 30)
• Credit card details, including billing address
• Processor account login (you may need to create one)

2. Choose a Processor and Register

Visit the processor's website, create an account, and verify your business identity. Registration usually involves uploading a copy of the tax filing or a recent IRS notice.

3. Enter Payment Details

Enter the EIN, select "Corporate Tax 2016," and input the exact amount. The system will calculate the processing fee and display the total charge.

4. Confirm and Submit

Review the summary, confirm that the billing address matches the card's address, and submit the payment. You will receive an electronic receipt and a confirmation number that serves as proof of filing.

5. Record the Transaction

Download the receipt PDF and upload it to your accounting system. Tag the expense as "Tax – Credit Card Fee" to separate the tax liability from the processing cost.

Cost Comparison Table

Timing and Deadlines

For the 2016 tax year, corporate returns were due on March 15, 2017 (or the next business day if the 15th fell on a weekend). Payments made after the deadline incur interest and penalties, regardless of the payment method. Credit‑card processors typically post the transaction within one business day, but you should allow an extra 24‑hour buffer before the deadline to avoid processing delays.

Potential Pitfalls and How to Avoid Them

• Processing Fees: Verify that the fee does not exceed the benefit of any rewards earned. Some cards waive fees for business expenses; check your card agreement.
• Duplicate Payments: Double‑check that the amount entered matches the tax liability on the filed return. A typo can lead to an overpayment that must be refunded.
• Card Limits: Corporate tax bills can be large. Ensure the credit limit covers the total plus the processor fee, or split the payment across multiple cards if the processor allows partial payments.
• Receipt Management: Keep both the IRS acknowledgment (usually sent after the processor forwards the payment) and the processor receipt. The IRS acknowledgment confirms the tax was received; the processor receipt proves you paid the fee.

After‑Payment Steps

Once the payment clears, the processor will forward the funds to the IRS and issue a confirmation code. Enter this code on the IRS "Where's My Refund?" portal (or the equivalent "Where's My Payment?" tool) to verify that the IRS has credited your account. If the confirmation does not appear within 48 hours, contact the processor's support line with your receipt number.

International Considerations

Businesses with foreign‑issued cards should be aware of currency conversion fees. Most processors charge in USD; the card network will apply its own conversion rate, which can add 1%–3% on top of the processor fee. For multinational firms, using a domestic US‑issued corporate card often minimizes total cost.