Citing a need for immediate liquidity in the U.S. Treasury, the IRS has announced a set of surprising measures for the 2011 tax season, including a 10% discount for taxpayers willing to pay in cash. A further discount – up to 15% depending on the type of coin – is available for taxpayers paying in coins.
Why the discount? The obvious answer is that the U.S. Treasury wants cash and they want it now.
Personal checks can be costly to the U.S. government as payment since they often contain mistakes, may get lost and can be bounced for insufficient funds. Checks may also take several days to clear and, IRS officials note, many of them are difficult to read because of the cartoon characters, sports logos and Anne Geddes babies screened in the background.
Similarly, accepting credit cards at the U.S. Treasury has proven to be troublesome. Credit card companies impose significant service fees, thus taking a chunk out of the government’s share. Credit card payments can also be rescinded if taxpayers are unhappy about their payments – and when aren’t taxpayers unhappy about their payments? IRS Commissioner Doug Shulman also noted that that paying your taxes with a credit card may increase a taxpayer’s credit card rewards program total, making paying taxes a little less painful. Shulman finds that unacceptable, noting, “Paying your taxes is supposed to hurt your wallet. You’re supposed to hate it, not use it as an opportunity to finance your trip to Disneyland.” Shulman, however, later clarified that he was not generally opposed to taxpayers visiting Disneyland.
The bottom line is that, with no service fees, no bounces and no to chance take it back, encouraging cash payments just makes sense for the U.S. Treasury. While they’re happy to accept paper dollars, the U.S. Treasury is experimenting with an additional discount in order to boost the circulation of coins. There are many reasons for this move, not the least of which is that coins last longer. Just last week, the GAO suggested that replacing the $1 paper bill with a $1 coin would save the government more money since coins are more durable and do not need to be replaced as often; it’s been estimated that the move to coins would save the government approximately $5.5 billion over 30 years.
In addition to the cost saving properties of coins, many are quite valuable to the U.S. Treasury. Due to the conflict in the Middle East, there is a considerable shortage of gold and silver. Coins made from those materials are more valuable than they were when the coins were made. As a result, the discounts to taxpayers will vary as follows:
— Pennies: 10%
— Nickels, Dimes, Quarters: 11%
— Silver Dollars: 13%
— Gold Dollars: 15%
It is worth noting that these discounts only apply for payments made through April 18, 2011, plus the automatic six month extension.
IRS Commissioner Doug Shulman has said, about the new plan to encourage coin payments:
We have been actively consulting with the GAO and the U.S. Mint about the best way to encourage U.S. residents to use more coinage. With the decline in numbers of residents actually playing PacMan and/or Frogger, there’s no real reason to use quarters and other coins. Residents are stashing them in jars, coffee cans and car coin trays, not spreading them about as the Mint intended. A discount for using them to pay your taxes seemed like the most appropriate and immediate way to get coins moving again.
Past U.S. Mint Director Edmund C. Moy added, “In recent years, with the rise of dollar bills, there has been little incentive to use ‘put another nickel in the nickelodeon.’ Therefore, the usage of coins has been on decline.” Moy later corrected himself, saying, “I meant to say, not many folks ‘put another dime in the jukebox, baby’ anymore.”
While Moy and Shulman might not exactly have their decades straight, they do have the gist of what’s happening. Let’s face it: cash and coins are the wave of the future. Not checks, not credit cards, not electronic transfers. Seriously, paying by computer? Like that’s going to catch on?
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Quick Note: Happy April Fool’s Day! Today’s post is completely a fabrication as part of April Fool’s Day. While it’s true that the IRS will take your cash (though, when it comes to coins, perhaps not happily so since they have to count it), you may only get a smile, not a discount.
Oh, taxgirl, you really had me going there. Good one!
Thanks Marie!
Great post. I should have know especially with the Disneyland comment.
GREAT GOOD ONE THANK …..
Good one, Kelly.
You had me until you mentioned the extra discount “up to 15%” for paying in coins. Can’t think of an IRS Service Center which would be happy about a huge bag of coins dropped on their doorstep (not to mention the fact that the IRS makes the taxpayer eat the fee for a credit card transaction!).
But, a good laugh, anyway.
The April Fools part was way too far down in this post! I was already a believer after the first paragraph!! :o) I could not imagine the IRS suggesting the people send money (especially not coins!) in the mail!! At first I was angry because I already sent my taxes in and would have seriously considered sending cash to get a discount!! (Insuring the mail, of course…) Glad it’s not true…