At Motley Fool Hidden Gems, we keep a sharp eye out for news on all the stocks we've written about. Not just the formal recommendations, but our up-and-coming "Tiny Gems" and our runner-up "Watch List" stocks, as well. So when I saw an AP report mentioning Hidden Gems Watch Lister Tier Technologies
The article, topical to a fault, addressed the rapidly rising numbers of taxpayers who go beyond filing and paying their taxes online -- and "put their taxes on their tab," so to speak, charging them to their credit cards.
Turns out this is becoming a trend in tax payments, with nearly a million credit and debit cards being used to pay income tax liabilities in 2004 -- three times what the IRS saw two years back. That's grand news for Tier, which owns Official Payments, one of just two companies that organize tax payments via plastic. Tier management says it's experiencing 20% growth in this market and expects to see that growth rate "continue for the foreseeable future."
Good news for Tier investors, to be sure. And for the IRS, which doesn't have to wait for your check to arrive by mail and pockets your money right away. However, it's not such great news for individual taxpayers. Careless filers may miss some important fine print when putting their taxes on plastic, you see. Because when you put your taxes on your tab, Tier takes its cut, adding a 2.49% "processing fee" to your total tax bill. So the more you pay, the more you pay.
Thus, it pays to read the fine print. And not just Tier's. You should also review the "generous" offers of your own credit card provider. For example, if you're charging your tax bill to get free airline miles or cash back, check the terms of your contract to make sure that tax payments actually do qualify for those rewards. Sometimes, they may not. And if you're an American Express
Getting a tax refund? Want to invest it in promising small-cap companies? Take a free trial to Motley Fool Hidden Gems .
Fool contributor Rich Smith has no position, short or long, in either company mentioned above.