Brendan Byrne of Chicago’s Humboldt Park neighborhood thought he’d fulfilled his tax obligations in 2024. Instead, he found himself caught in a bureaucratic nightmare for nearly two years, battling an erroneous debt flagged by the IRS and a defunct online payment platform. His experience highlights the potential pitfalls of using third-party tax payment services and the challenges taxpayers face when those systems fail.
After filing his 2023 federal tax return, Byrne owed $979. He opted to pay through PayUSAtax, a service linked on the IRS website as an authorized provider. While the $979 payment, plus a $17.82 convenience fee, was charged to his credit card, the IRS continued to show a balance due. The issue stemmed from a payment that seemingly vanished into a digital void, leaving Byrne to navigate a frustrating cycle of calls and unanswered questions.
PayUSAtax, operated by Value Payment Systems, has drawn hundreds of complaints in recent years. The Better Business Bureau has logged 294 complaints against Value Payment Systems’ parent company, Catalis, over the past three years, though that number has decreased to 21 complaints in the last 12 months, according to reports. The issues, according to Eric Johnson, executive vice president at Georgia-based Catalis, often arise from simple errors – mistyped numbers or discrepancies in names and Social Security numbers on joint returns. “Occasionally, there’s one that falls through the cracks,” Johnson said.
Byrne’s case proved to be one of those cracks. Initially, his payment status on the IRS website showed as “pending.” When that status disappeared, his account still reflected the $979 debt, plus accruing interest. The IRS directed him to contact PayUSAtax, but the company offered no assistance, repeatedly referring him back to the IRS. This began a prolonged struggle to resolve the issue, compounded when Byrne filed his 2024 return and the IRS seized almost half of his $2,561 refund.
“They claimed that they could not see a pending payment of $979, and there was no evidence I ever made a payment of that amount and that I owed the $1,057.32 that they removed from my refund,” Byrne said. He was unable to successfully dispute the charge with his credit card issuer, adding to his frustration. “I felt helpless, actually,” Byrne said. “No one was giving me any answers.”
Humboldt Park resident Brendan Byrne, said he felt “helpless” as he spent nearly two years trying to straighten out a botched tax payment.
Tyler Pasciak LaRiviere/Sun-Times
After inquiries from the Chicago Sun-Times, Catalis investigated Byrne’s case and determined no errors were made on his end. By October, the company had informed the IRS that the payment was “located [and] was unpostable.” The IRS confirmed that some payments can become “unpostable” due to programming checks for specific conditions, requiring manual review. The resolution was further delayed by a government shutdown in October and November 2023, which impacted some IRS activities.
Finally, in mid-December, Byrne received a refund check for $1,105.42, including accrued interest. While relieved, the ordeal underscored the potential for complications when using third-party payment processors. Catalis has since exited the federal tax payment business and now focuses on processing payments for local governments.
The IRS continues to utilize third-party processors like Pay1040 and ACI Payments for taxpayers using debit or credit cards, with convenience fees ranging from 1.75% to 1.85% depending on the payment method. Taxpayers also have the option to pay via check or money order, same-day wire, or direct pay from their bank account, which is free. The IRS also offers payment plans, with potential user fees that may be waived or reduced based on income. More information on IRS payment options is available on the agency’s website.
Byrne’s experience serves as a cautionary tale for taxpayers. While convenient, relying on third-party payment platforms carries inherent risks. Direct payment methods, though potentially less convenient, offer greater control and a clearer audit trail. As the IRS continues to modernize its systems, ensuring a seamless and accurate payment process remains a critical priority.
The IRS is currently evaluating its processes for handling unpostable payments and working to improve communication with taxpayers facing similar issues. The next update on these efforts is expected in the spring of 2026, following a review of the 2025 tax season.
Have you experienced issues with online tax payments? Share your story in the comments below.
