Paying the IRS by Credit Card: What TD 10060 Changes

Final regulations from the Treasury Department and the IRS took effect today, October 19, 2026, and they rewrite one of the quieter rules about paying the IRS by credit card. For most Oklahoma and Texas business owners the practical change is small for now. The belief system around card payments, though, is full of half-truths, and the day a rule changes is a good day to check each belief against what the rule actually says.

Here is the short version of what happened. Treasury Decision 10060, published in the Federal Register on October 19, 2026 (91 FR 65980), amends the regulation under Internal Revenue Code section 6311 that governs payment of tax by card. It implements section 2303 of the Taxpayer First Act, which Congress enacted on July 1, 2019, and it applies to tax payments and reimbursement fees made on or after October 19, 2026. These are final regulations, not a proposal. The rest of this piece walks through six things people believe about paying federal tax by card and tests each one against the rule and the IRS payment pages as they read today.

One scope note before we start. Everything below is federal. Nothing in TD 10060 changes how the Oklahoma Tax Commission or any other state agency accepts payment, and we are not addressing state payment mechanics here.

Myth 1: the IRS takes cards, so the IRS charges the fee

Reality, at least until today: the IRS was legally barred from paying anyone for card processing. Before the Taxpayer First Act, section 6311(d)(2) let the Secretary contract for card-payment services but prohibited paying any fee or other consideration under those contracts. The workaround was third-party processors. The processor charged the taxpayer, and the IRS stayed out of the money.

That is still what the IRS card-payment page describes. It lists two approved processors, Pay1040 and ACI Payments, and states flatly that "no part of the fee goes to the IRS." The fee structure the page shows is a flat charge for debit cards (just over two dollars at either processor as of this writing), a percentage for consumer credit cards (1.75 percent at one, 1.85 percent at the other, each with a small minimum), and a higher percentage for commercial cards (2.89 and 2.95 percent). Check the page before you pay; those figures are the processors' to change.

What TD 10060 does is turn the old prohibition into a discretionary exception. The IRS may now pay a fee under a card contract, provided it ensures the fee is fully recouped from the people paying by card. The mechanism is a "reimbursement fee," charged at the time of the tax payment and in addition to the tax. So the myth is half-true going forward: the IRS can charge a fee in its own name, but it still cannot absorb one. Whether the fee is collected by a processor or by the IRS, the taxpayer pays it.

Myth 2: a fee the IRS charges is really just more tax

The regulation says the opposite in one sentence: "The reimbursement fee is not a tax imposed by the Code." That sentence has consequences.

Because the fee is not a tax, it does not get the treatment a tax overpayment gets. The rule states that no portion of the reimbursement fee is eligible for refund or credit under section 6402, which is the provision the IRS uses to refund overpayments or apply them against other balances. If you pay a balance by card, later win an adjustment that wipes out the liability, and get the tax back, the reimbursement fee stays gone. The fee is capped at what the IRS itself pays under the contract, and the regulation says the Commissioner "will seek to minimize the amount of the fees paid," but a minimized fee is still a nonrefundable one.

Error handling works on a separate track, and this is the practitioner's edge in the whole rule. The regulation extends the error-resolution procedures of the Truth in Lending Act and the Electronic Fund Transfer Act to card payments and to reimbursement fees. Those procedures cover the card account, such as a duplicate charge or a transaction you did not authorize. The regulation then says those procedures do not apply "for the purpose of resolving any errors, disputes or adjustments relating to the underlying tax liability." In plain terms, a chargeback is a tool for fixing the card transaction, not for contesting the tax. We have seen people reason that disputing a card payment is a shortcut around an assessment they disagree with. It is not. The assessment lives on the IRS side under ordinary deficiency and collection procedure, and a reversed payment just reopens the balance with interest running.

Myth 3: starting today you can pay the IRS directly by card over the phone

Reality: the rule authorizes that outcome; it does not deliver it. The operative language is permissive. The Commissioner "may" enter into card-payment contracts, and only "if such contracts are cost beneficial to the government." The preamble explains the goal, which is to let taxpayers pay by card directly to the IRS, such as over the telephone, without waiting for the IRS to connect them to a third-party processor. Nothing in the regulation requires the IRS to accept cards directly or to accept them at all.

As of this writing, the IRS card-payment page still routes every card payment through the two processors. The IRS payments page lists debit and credit cards with the note "most tax payments accepted, fees apply," and does not describe any direct card channel. So the honest status is: authorized as of October 19, 2026, not yet visible in the payment options the IRS publishes. The regulation was proposed on July 2, 2024, drew eight public comments, and was adopted without change.

Myth 4: a business can pay anything it owes the IRS by card

This one trips up employers more than any other. The IRS card-payment page says in so many words that "federal tax deposits can't be paid by card." That is the category that matters most to a business with payroll: the periodic employment tax deposits that go through the Electronic Federal Tax Payment System. If your cash crunch is a missed deposit, a card is not the fix, and the deposit penalty clock keeps running regardless of how you planned to pay. We covered how that deposit schedule and its penalty work in an earlier piece.

The card page also says that "frequency limits apply for card and cash payments" and points to a table of those limits. We are not restating numbers from that table here; look it up before you plan on splitting a large balance across several card transactions, because the limits are per payment type and per period.

Compare the bank-account channels the IRS payments page describes. Paying from a bank account is listed as "all tax payments accepted, free." The IRS labels its Business Tax Account the preferred route and says it allows scheduling up to 144 payments a day and paying up to 500 million dollars a day. The business guest version of Direct Pay allows up to five payments a day and up to 10 million dollars a day. For businesses the page also links to EFTPS. The bank-account route is listed as free, and the employment tax deposits a card cannot pay are the ones the deposit rules route through EFTPS.

Myth 5: paying the IRS by credit card is a dead loss on fees

Reality: the fee is a real cost, but the IRS card-payment page states that card processing fees are deductible for businesses. Whether a given fee is deductible by a given taxpayer depends on whose liability was paid and in what capacity, which is a question for your CPA rather than a blog post. An owner paying personal income tax on pass-through income with a business card is a different fact pattern from a C corporation paying its own tax.

Two more details from the same page matter. Your card statement will show the payment as "United States Treasury Tax Payment" and the fee as a "Tax Payment Convenience Fee" or similar wording, which matters when someone reconciles the books months later. And if you overpay by card, the overpayment is refunded unless you owe another debt on the account. That refund covers the tax, not the fee, which brings us back to Myth 2.

Myth 6: a card is always worse than an installment agreement (or always better)

Neither version holds up. The two tools price time differently, and which costs less depends on facts you can look up.

A card payment is a one-time fee plus whatever interest your card issuer charges on the unpaid balance. Check the current rate on your own card; card rates are set by the issuer and can run well above or below what the IRS charges, depending on the card and the month. In exchange, full payment by card ends the IRS side of the problem. Interest and the failure-to-pay penalty stop accruing on a paid balance, and the card page notes that a federal tax lien release can take up to 30 days after full payment is received. Under section 6321 the lien arises once assessed tax goes unpaid after demand, and a notice of lien that is never filed is one that never shows up on a title search. The card page also warns that liens may remain if you do not pay in full, which is the trap in a partial card payment.

An installment agreement, by contrast, keeps the balance with the IRS. The IRS payments page describes payment plans simply as a way to "pay your taxes over time," and tells businesses to use the contact information on their notice to set one up. Interest continues during the agreement, a user fee generally applies to set one up, and a missed payment can default the agreement. We walked through how those agreements are negotiated and how IRS interest builds and stops in earlier articles, and both pieces apply here without modification.

The government-side consideration deserves a fair hearing too. An installment agreement is a known process with published rules and a long track record. A card balance is a private debt with a private creditor, and if the business cannot service it, there is no IRS Appeals office to call about the card.

How we think about cards versus an agreement when cash is short

When a client is deciding between the two, these are the questions we work through, in roughly this order.

1. Is the balance something a card can even pay? Employment tax deposits cannot be paid by card. If the problem is a deposit, the conversation is about EFTPS and the deposit penalty, not about cards.
2. How fast can the card be paid off? A card makes sense when the business can clear the card balance within a billing cycle or two, so the processor fee is the whole cost. Carrying a card balance for a year turns a flat fee into a second interest stream running alongside nothing, because the IRS interest already stopped. That can still beat an IRS plan, but only if you compare the card's current rate to the IRS rate rather than assuming.
3. Which card tier applies? The IRS card page prices commercial cards above consumer credit cards. A business card can carry a materially higher percentage, and on a five-figure balance the difference is real money.
4. Is a lien already in play? If a notice of federal tax lien has been filed or is close, full payment that starts the release clock has a value that an installment agreement does not. If no lien is in sight and the balance is modest, that value is lower.
5. Does the card payment create the next problem? This is where business, tax, and cash-flow questions turn out to be one question. Draining the card's available credit to pay last quarter's income tax can leave the company unable to make this quarter's payroll deposit, and a deposit failure is worse than an income-tax balance because of personal exposure for the responsible people. A payment plan that preserves liquidity may be the better posture even when the card is arithmetically cheaper.
6. Is the liability itself in dispute? Paying a disputed balance by card does not preserve anything a bank-account payment would not, and the reimbursement fee or processor fee is gone either way. If the amount is wrong, the fix is on the IRS side of the ledger, through the notice-response and appeal channels, before or alongside payment.

One more point on timing. TD 10060 applies to payments and reimbursement fees made on or after October 19, 2026, but as of today the IRS has not published a direct card channel, so the fee you actually pay is still the processor's. When the IRS does begin charging a reimbursement fee in its own name, expect the regulation's limits to apply: capped at the IRS's own cost, not a tax, not refundable, and with card-account errors handled under the card statutes rather than through the IRS.

If your company is weighing how to pay a federal balance it cannot cover comfortably, or if a notice has arrived and the numbers do not look right, this is the stage where a short conversation with our practice tends to save more than it costs. You can reach us through the contact page or through our Oklahoma City office, and we would rather talk through the options before a payment method locks one in.

This article is general information about Oklahoma, Texas, and federal law, not legal advice, and it does not create an attorney-client relationship. Facts matter; talk to a lawyer about yours.