A taxpayer’s worst nightmare: You paid, but the IRS says you didn’t

Imagine paying your tax bill and then getting a notice from the IRS saying you didn’t, and you still owe hundreds or even thousands of dollars.

Consumer adviser Clark Howard found this is happening when some taxpayers pay by credit card.

What makes this so disturbing is that the taxpayers are going right to the link provided on the IRS website at IRS.gov.

Consumer investigator Justin Gray from our sister station WSB-TV in Atlanta started looking into this after they got calls.

Taxpayers who Gray spoke with had the proof that they paid the tax bills.

The money was charged to their credit cards but the message from the IRS was essentially, “Tough. Pay us again.”

“When you get a certified letter from the IRS it’s never a birthday card, OK,” said Tracie Thompson.

She said when she opened the letter, she learned the IRS said she had unpaid taxes.

“I don’t get in trouble, so I felt like I was in trouble. I felt nervous,” Thompson said.

The thing is, Thompson had paid those tax bills through one of the three credit card processing companies the IRS links to on its website.

The money had been charged to her credit card by PayUSATax, but IRS said they never received it.

“I paid an extra fee when I paid through them because I want to know they got it. I don’t want to mail a check,” Thompson said. “They stole my money,” Cecelia Johnson said.

Johnson also got a letter from the IRS. She has credit card receipts and statements from PayUSATax proving she paid $1,200 to the IRS through the PayUSATax portal.

But the IRS told her even with that evidence, she still owed them the money.

“How can you trust the IRS? Because they’re not doing due diligence and taking care of the matter,” Johnson said.

If you check consumer sites like the Better Business Bureau and Trust Pilot, or threads on Reddit, you will see similar stories.

For Thompson, the worst thing is that she has a tax preparation business.

“Who’s taking that money? That’s a lot of money. Who’s taking that money? Like, where is it?” Thompson said.

Johnson and Thompson said they called and emailed PayUSATax repeatedly to ask that and never got through.

“So one day when I was off work, I stayed on hold for four hours to where it would not let me talk to anybody,” Johnson said.

Nobody at PayUSATax or its parent company Value Payment Systems called Channel 2 Action News back either, so Gray went to their Alpharetta offices.

After that visit, an executive with the company started looking into both women’s cases.

Value Payment Systems blames the issue mostly on user error, writing that “in most cases taxpayers have entered incorrect data/digits.” In fact, the company said they make up less than 0.1% of all payments.

In Thompson’s case, PayUSATax said the payment was transmitted to the IRS.

The company claims these mistakes are rare.

“We process multiple million individual payments per year and while the rate of instances like this is low, these situations do occur.”

Howard said anytime you add a third party into a transaction with the federal government there’s a potential for problems.

“The taxpayer should not be harmed for later payer penalties when they did exactly what the IRS recommended on its own website,” Howard said.

Taxpayers stuck in this mess say whether the problem is with PayUSATax or the IRS, the IRS has a responsibility to fix it.

“This is a big deal. And the IRS won’t even acknowledge it,” Thompson said.

Our sister station in Atlanta, WSB-TV, asked the IRS about all this. They told us at this point, they are unaware of an issue

Value Payment Systems said just last month, the IRS started allowing them to share a reference number with taxpayers that the taxpayer can use to communicate with the IRS about payment problems.

They weren’t allowed to do that before.

Howard’s advice: you are better off filing a return and getting on a payment plan, paying electronic directly to the IRS and cut the middleman out.

Howard said a payment plan is vastly superior to paying the IRS with a credit card because you are not paying upward of 20% interest.

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