Slate's Explainer: Who Cashes Your Tax Check?
ALEX CHADWICK, host:
This is DAY TO DAY. I'm Alex Chadwick.
April 15th was Saturday. But the deadline to file your taxes is actually midnight tonight in most places. Some of us will get a refund. Others will be sending money to Uncle Sam. And that raised a question for the Explainer Team at the online magazine Slate. What exactly does happen to those checks we send to the U.S. Treasury?
Here with the answer is Slate's Andy Bowers.
Mr. ANDY BOWERS (Senior Editor, Slate): The money ends up in the Federal Reserve Bank of New York. But it makes a few pit stops along the way, depending on whether you pay with a paper check or electronically. Taxpayers who owe money are instructed to send their tax forms and their check or money order to an Internal Revenue Service center.
If you pay with paper, your payment goes from the post office or service center to what's called a lock box bank, essentially, the equivalent of a really expensive P.O. box. Lock box banks are often used to process high volume mail, such as utility payments, and they're outfitted with equipment that allows for high-speed envelope opening. The lock box bank deposits your check into an in-house Treasury Department account. A bank official logs all of the tax payments that have cleared, and eventually wires the money electronically to the Treasury General Account at the Federal Reserve Bank. The government has your cash in its main account by the next business day.
The system works differently for electronic filers. Once you provide your bank information to the IRS, what's called the Electronic Federal Tax Payment System transfers the money you owe, from your account, directly into the government. The IRS does not take American Express, or Visa, or any other credit card either. But third parties do offer this service for a fee.
CHADWICK: Andy Bowers is a Slate senior editor. And that Explainer was compiled by Melonyce McAfee. Transcript provided by NPR, Copyright NPR.