Treasury Decision 10060, Update of Regulations Regarding Payment of Tax by Commercially Acceptable Means, 91 Fed. Reg. [page] (Oct. 19, 2026) (codified at 26 C.F.R. § 301.6311-2)

The Department of the Treasury and the Internal Revenue Service (IRS) have promulgated final regulations under Treasury Decision 10060 (RIN 1545-BP66), adopting without substantive change the proposed regulations issued under REG-120137-19 (89 FR 54746). These regulatory actions overhaul 26 C.F.R. § 301.6311-2 to implement statutory amendments enacted under section 2303 of the Taxpayer First Act (TFA), Public Law 116-25, 133 Stat. 981, 1013 (July 1, 2019). The statutory amendments modify section 6311(d)(2) of the Internal Revenue Code (Code) to grant the Secretary of the Treasury discretionary authority to enter into contracts providing for the payment of fees related to receiving payments of tax by credit card or debit card, provided that any such fee paid by the IRS is fully recouped from the taxpayer making the card payment.

Under prior statutory law and existing Treasury Regulations—promulgated via Treasury Decision 8969 (66 FR 64740, Dec. 14, 2001)—Internal Revenue Code section 6311(d)(2) authorized the Secretary to enter into contracts for credit and debit card processing services but strictly contained a “prohibition on the payment of any fee by the IRS under any contracts related to payment of taxes by credit, debit, or charge card.” Concurrently, existing 26 C.F.R. § 301.6311-2(e) mandated that the IRS “may not impose any fee or charge on persons making payment of taxes by credit card or debit card.” Consequently, the IRS was required to route taxpayers wishing to pay by credit or debit card to independent third-party payment processors. Under that administrative framework, taxpayers paid processing fees directly to third-party processors—typically structured as a variable percentage fee for credit card transactions and a flat fee for debit card transactions—while the IRS received no portion of the fee and incurred no direct fee liability.

The statutory shift under Section 2303 of the TFA, and its administrative implementation through REG-120137-19 and T.D. 10060, fundamentally alters this operational constraint. By removing the blanket prohibition on IRS fee payments, Congress and Treasury have enabled the IRS to directly accept tax payments by credit or debit card without requiring taxpayers to be redirected or connected to external third-party processing portals.

Legislative Rationale and Administrative Objectives

Treasury and the IRS released these Proposed and Final Regulations to fulfill explicit legislative intent and achieve significant administrative efficiencies. As noted in the Treasury explanations, because H.R. 3151 became the vehicle for enacting the TFA without separate House, Senate, or Conference Reports, the IRS looked to the House Ways and Means Committee Report for H.R. 1957 (H.R. Rep. No. 116-39(I), 116th Cong., 1st Sess. at 90 (2019))—the immediate predecessor containing identical statutory language—to evaluate the intended scope of section 2303.

The primary administrative objective driving the regulatory update is payment modernization and operational cost reduction. Treasury highlighted that section 2303 of the TFA “enables the IRS to receive similar benefits as other entities that accept credit or debit cards, including guaranteed receipt of funds and reduction of paper check processing costs.” Furthermore, the direct ingestion of credit and debit card payments enhances taxpayer compliance and convenience, as it “enables taxpayers to make a payment more easily by credit or debit card directly to the IRS, such as over the telephone, without having to separately wait for the IRS to connect them to third-party processors.”

From a fiscal perspective, Treasury emphasized in its regulatory impact analysis under Executive Order 12866 and the Regulatory Flexibility Act (5 U.S.C. chapter 6) that “expanding taxpayers’ payment options generally encourages tax compliance, so it is beneficial for both the government and taxpayers,” while deriving a distinct “cost benefit to the government... derived from a reduction of check processing costs.”

IRS Analysis of Statutory Authority and Administrative Law Positions

The IRS justified the issuance of T.D. 10060 by pointing to express delegations of statutory rulemaking authority under the Code. Section 6311(a) establishes that “it is lawful for the Secretary to receive payment for internal revenue taxes by any commercially acceptable means that the Secretary deems appropriate to the extent and under the conditions provided in regulations prescribed by the Secretary.” Complementing this general rule, section 6311(d)(1)(A) directs the Secretary to prescribe regulations specifying acceptable commercial payment methods, while section 7805(a) provides general authority to “prescribe all needful rules and regulations for the enforcement of [the Code], including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue.”

In interpreting section 2303 of the TFA, Treasury stressed the discretionary nature of the statutory exception. The statute does not obligate the IRS to eliminate existing third-party processing arrangements; rather, it provides flexibility. Under final 26 C.F.R. § 301.6311-2(e)(2), the IRS retains authority to enter into traditional contracts under which the IRS pays no fee, third parties charge processing fees directly to taxpayers, and the IRS receives no portion of such fees. Simultaneously, under paragraph (e)(3), the IRS is empowered to enter into contracts under which it pays processing fees directly, subject to two mandatory statutory conditions:

First, section 6311(d)(2) requires that “in negotiating contracts under this paragraph (e)(3), the Commissioner will seek to minimize the amount of the fees paid.” Second, if the IRS pays a processing fee, it “must recoup the full amount paid under such contracts as a reimbursement fee from the persons paying tax by credit card or debit card.”

A vital technical distinction established by the IRS in the regulatory text concerns the legal status of the “reimbursement fee.” The IRS explicitly stated: “The reimbursement fee is not a tax imposed by the Code, and no portion of the reimbursement fee is eligible for refund or credit under section 6402 of the Code.” Because Internal Revenue Code section 6402 governs refunds and credits exclusively “in respect of an internal revenue tax,” taxpayers who receive a refund of underlying taxes paid by credit card cannot utilize tax overpayment procedures to recover the transaction reimbursement fee paid to the IRS.

Instead, the IRS clarified that account adjustments and fee disputes are governed by consumer financial protection statutes integrated into section 6311(d)(3) and 26 C.F.R. § 301.6311-2(d)(1). Specifically, card payment errors and reimbursement fee errors “are subject to the applicable error resolution procedures of section 161 of the Truth in Lending Act (15 U.S.C. 1666), section 908 of the Electronic Fund Transfer Act (15 U.S.C. 1693f), or any similar provisions of State or local law, for the purpose of resolving errors relating to the credit card or debit card account, but not for the purpose of resolving any errors, disputes or adjustments relating to the underlying tax liability.” Moreover, paragraph (d)(5) reinforces that section 170 of the Truth in Lending Act (15 U.S.C. § 1666i), regarding cardholder claims and defenses against merchants, remains wholly inapplicable to tax payments.

During the public comment period for REG-120137-19, eight comments were submitted. In the preamble to T.D. 10060, Treasury systematically analyzed and addressed key legal and policy objections:

Administrative Fee Models: One commenter urged the IRS to implement an improved fee reimbursement structure to reduce taxpayer costs. The IRS rejected modifying the regulatory text, explaining that “the concerns identified in the comment are outside the scope of these regulations, which do not actually implement any particular payment process or contract.”
Drafting Plainness and Clarity: A commenter suggested simpler terminology to avoid ambiguous interpretations. Treasury determined that “the language used in the proposed regulations, which these final regulations adopt, is drafted in a straightforward way that is consistent with the statutory text, and that no further changes are necessary.”
Prohibition of Card Fees: Another comment advocated eliminating card fees entirely. Treasury noted that section 2303 of the TFA explicitly conditions IRS fee payment on ensuring that “any such fee is fully recouped from the persons paying taxes by credit or debit card pursuant to such contract,” making fee absorption legally impermissible under the statutory text.
OMB Circular A-76 and the FAIR Act: A commenter argued that the IRS must conduct a formal cost-comparison under OMB Circular A-76 in alignment with the Federal Activities Inventory Reform Act of 1998 (FAIR Act, 31 U.S.C. § 501), contending the rule “would potentially unwind the longstanding policy of the Federal Government to contract with the private sector to provide purely commercial services such as card payment processing.” Treasury firmly rejected this challenge, stating that “because neither section 6311 nor these regulations change the IRS’s obligations under the Circular... those activities will continue to be reviewed, and all applicable requirements will be met upon implementation of the final rule. Accordingly, the Treasury Department and the IRS have determined that the requested cost comparison is beyond the scope of these regulations.”

Revisions, Additions, and Deletions to Existing Regulations

To implement T.D. 10060, Treasury executed specific structural revisions, additions, and deletions within 26 C.F.R. § 301.6311-2, amending the prior text established under T.D. 8969:

Deletion of Prior Fee Prohibition in Paragraph (e) The final regulations completely remove prior 26 C.F.R. § 301.6311-2(e), which contained the express mandate that “the Internal Revenue Service may not impose any fee or charge on persons making payment of taxes by credit card or debit card.”

Redesignation and Restructuring of Contracting Authority in Paragraph (e) Prior paragraph (f) (“Authority to enter into contracts”) and subsequent paragraphs (g) and (h) were redesignated as paragraphs (e), (f), and (g). Newly redesignated paragraph (e) was substantially expanded and restructured into three distinct sub-paragraphs:

Paragraph (e)(1) (“In general”): Establishes the threshold standard that “the Commissioner may enter into contracts related to receiving payments of tax by credit card or debit card if such contracts are cost beneficial to the government,” based on an analysis appropriate to the government’s investment.
Paragraph (e)(2) (“Contracts under which fees are prohibited”): Preserves authorization for contracts where the IRS pays no fee or charge. Re-enacts the prior rule that third-party processors may impose fees directly on taxpayers, provided “the IRS may not receive any part of any such fees that may be charged.”
Paragraph (e)(3) (“Contracts under which fees are permitted and must be recouped”): Adds new authorization for contracts where the IRS pays a fee, codifying the statutory requirement that the IRS “must recoup the full amount paid under such contracts as a reimbursement fee from the persons paying tax by credit card or debit card.” Specifies that reimbursement fees must be paid “at the time of, and in addition to, the tax payment,” mandates fee minimization in negotiations, and clarifies non-refundability under section 6402.

Revision of Account Error Resolution Scope in Paragraph (d)(1) Paragraph (d)(1) was revised to insert explicit reference to reimbursement fees, providing that “payments of taxes by credit card or debit card, and payments of reimbursement fees referred to in paragraph (e)(2) of this section, are subject to the applicable error resolution procedures of section 161 of the Truth in Lending Act (15 U.S.C. 1666), section 908 of the Electronic Fund Transfer Act (15 U.S.C. 1693f)...”

Technical and Terminology Revisions In newly redesignated paragraph (f) (governing confidentiality of payment information), the text was amended by “removing the language ‘Internal Revenue Service’ and adding the language ‘IRS’ in its place.”

Applicability Date Revision Newly redesignated paragraph (g) was updated to replace the prior applicability date (December 14, 2001) with the current applicability standard.

Effective Dates and Taxpayer Reliance Analysis

In the Notice of Proposed Rulemaking (REG-120137-19), Treasury proposed that the regulations “apply to payments of taxes and reimbursement fees made on or after the date the regulations are published as final regulations in the Federal Register.”

Regarding taxpayer reliance on REG-120137-19 pending finalization, the proposed regulations contained no special reliance provision authorizing taxpayers or the IRS to execute direct-fee recoupment contracts prior to final publication. From a practical and administrative law perspective, interim reliance was neither applicable nor available: because section 6311(d)(2) governs administrative procurement contracts between the IRS and payment processors rather than tax liability calculations, taxpayers could not independently claim deductions, credits, or altered tax positions under the proposed rules. Direct card payments to the IRS with integrated reimbursement fees could only commence once the IRS executed operational contracts under the finalized regulatory authority.

Final Treasury Decision 10060 establishes that the final regulations are effective on the date of publication in the Federal Register (scheduled for October 19, 2026). Under final 26 C.F.R. § 301.6311-2(g), the finalized rules apply strictly to “payments of taxes and reimbursement fees made on or after [INSERT DATE OF PUBLICATION OF THIS DOCUMENT IN THE FEDERAL REGISTER].”

Prepared with assistance from Gemini Notebook.