Owe $100 million or more to the Internal Revenue Service (IRS)? Better write that check now.
The latest edition of the Internal Revenue Bulletin, Bulletin No. 2015–36, dated, September 7, 2015, has this to say about the Federal Revenue’s new check policy.
The Federal Reserve will not accept checks that are larger than $99,999,999.00 and agencies have been directed to return these checks to the originator. Beginning January 1, 2016, IRS will begin returning checks for more than $99,999,999.00 to the originator.
The notice was posted in the latest edition of the Bulletin under headings for income tax, gift tax, estate tax, self-employment tax, employment tax, and excise tax.
To be fair, the IRS isn’t trying to make it more difficult for multimillionaires to pay their tax bills. Rather, this is a reminder of a ruling previously announced by the Bureau of Fiscal Service (BFS) applicable to all federal agencies. The rule as outlined in that notice states the large check policy per the Treasury Financial Manual (TFM), Volume 1, Part 5, Section 2060 that “agencies must not accept any check written for more than $99,999,999.99, as the Federal Reserve will not process checks over that amount.” The Federal Reserve Banks Operating Circular 3, Section 3.2, states that the Federal Reserve Banks do not handle any checks over $99,999,999.00. No, that’s not a typo: it is indeed a 99 cent spread. I’m not sure why the numbers are different but this discrepancy, of course, brings up the real question of what happens if you write a check for, say, $99,999,999.25? My recommendation is that you not try this at home.
What’s the reason behind the new rule? The rule, which was announced on May 4, 2015, has to do with mistakes. As it turns out, “no check processing equipment” can handle checks over $1 million. Checks over $1 million are handled manually. Manual processing, according to the BFS, could result in lost, stolen or mis-shipped checks (Mis-shipped? Yeah, not a word I see a lot either; per the USPS, it means “The mailer sent item to an incorrect postal facility for delivery from that facility, for example, an incorrect destination delivery unit which does not have the final delivery address within its service area” and is different from “Missent” mail). Manual check processing also increases the risk of fraud and bounced checks (I’ll take their word for it as I have never personally bounced a check for over a million dollars) as well as overall chances of mistake – like maybe confuse $99,999,999.00 and $99,999,999.99?
The good news is that it doesn’t appear that the feds have imposed limits on credit card payments, though your credit card company might have other ideas. However, for high dollar credit card payments to IRS, you must follow specific instructions: for payments of more than $1 million, you must use the Official Payments Corporation by calling 1-888-889-7228.
The Internal Revenue Bulletin, which is published weekly, is the “authoritative instrument” for IRS to post official rulings and procedures as well as Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. This also includes statements of internal practices and procedures that affect taxpayers. You can find the most recent edition here (downloads as a pdf). You can find the collection of weekly bulletins here.