IRS Will No Longer Accept $100 Million Checks Beginning in 2016.

(Parker Tax Publishing September 20, 2015)

Due to limitations on the amounts Federal Reserve banks can process, the IRS will no longer accept payments of $100 million or more by check beginning in 2016. Announcement 2015-23.

The IRS has announced that, beginning in 2016, it will stop accepting payments by check for amounts of $100 million or more. Taxpayers will be required to send two or more checks, or use a wire transfer to make their payments.

The announcement follows a reminder sent by the Bureau of Fiscal Service (Fiscal Service) to the IRS that Federal Reserve banks should not accept checks over the amount of $99,999,999. The Fiscal Service stated that there had been an increase in submissions of large dollar checks by federal agencies to the Treasury General Accounts (TGAs) that were over this amount, in violation of the Fiscal Service's policies.

This limitation on check amounts is in place because Federal Reserve Banks do not handle items in excess of $99,999,999.

OBSERVATION: The change in the IRS's check acceptance policy will likely affect only a dozen or so taxpayers. The IRS has indicated that it received and deposited just 14 checks for $100 million dollars or more during the most recent tax season.

The Fiscal Service notes that because no check processing equipment can handle amounts over a million dollars, large dollar items are handled entirely manually. Because of manual processing, the risks of fraudulent activity, processing errors, and uncollectable funds are more likely when checks over these amounts are accepted by TGA depositaries. In addition, the large check items may become lost, mis-shipped, or stolen, and require special handling procedures by the TGA.

The limitation on large checks will apply to all payments made to the IRS, including payments for estate, gift, employment, self-employment, and excise taxes. (Staff Editor Parker Tax Publishing)

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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