ACH vs. Credit Card
When filing Texas sales tax, franchise tax, or other Comptroller obligations, you can pay electronically via ACH (Automated Clearing House) or by credit card. Choosing the most cost-effective method helps preserve cash flow and reduce fees.
IRC & Texas Tax Code References
- IRC §6302(a) requires taxpayers to timely remit federal tax payments via electronic funds transfer when thresholds are met; by analogy, many states encourage ACH for reliability.
- IRC §7502 governs the timeliness of mailed payments, underscoring that electronic payments (ACH) post on the date initiated.
- Texas Tax Code §111.052 mandates electronic payment for franchise tax liabilities over $1 million.
Relevant Forms & Regulations
- Texas Comptroller Form 05-158 (Franchise Tax Report and Payment)
- Texas Comptroller Form 01-339 (Sales Tax Return and Payment)
- Texas Electronic Funds Transfer (EFT) Requirements (EFT enrollment via WebFile)
- Credit Card Convenience Fee Disclosure—the state passes processing fees set by your merchant provider.
Detailed Example
John’s Texas LLC owes $50,000 in franchise tax. He reviews two options:
- ACH Debit: No state fee; bank may charge $0–$5. Funds withdraw next business day.
- Credit Card: Processor fee ~2.25% = $1,125. Payment posts immediately.
Result: ACH saves at least $1,120 compared to credit card.
Step-by-Step Guide to Comply
- Determine Liability & Threshold
- Review your tax return (Form 05-158 or 01-339) to confirm the amount due.
- Enroll in EFT (if required)
- For liabilities > $1 million, enroll via WebFile at comptroller.texas.gov/e-file/EFT.
- Initiate ACH Payment
- Log in to WebFile.
- Select “Make a Payment” → “Electronic Funds Transfer.”
- Enter bank routing & account numbers; schedule debit date.
- Alternatively, Opt for Credit Card
- On WebFile, choose “Pay by Credit Card.”
- Acknowledge convenience fee (2–3%).
- Complete payment; retain the confirmation.
- Record & Verify
- Save payment confirmation.
- Check bank statement or card billing to ensure correct posting date.
Conclusion
While credit cards offer instant funding and rewards, the convenience fees (2–3%) make them an expensive choice for sizable Texas Comptroller payments. ACH debits, with minimal or no fees, are the most cost-effective option for businesses of all sizes.
Schedule a Consultation
Discuss your Texas tax strategy in more detail—schedule a meeting with our CPA, Anshul Goyal:
https://calendly.com/anshulcpa/
Disclaimer
Anshul Goyal, CPA EA FCA, is a licensed Certified Public Accountant in the United States, admitted to practice before the IRS as an Enrolled Agent. He represents clients in tax litigation and is a cross-border tax expert assisting American businesses and Indians living in the United States with IRS compliances.
About Our CPA
Anshul Goyal brings over a decade of experience in U.S. federal and state tax compliance. He specializes in entity structuring, multi-jurisdictional tax planning, and IRS representation, helping clients minimize liabilities and remain audit-ready.
Top 5 FAQs
1. Is ACH required for all Texas tax payments?
Only mandatory for franchise tax liabilities over $1 million; others are optional but encouraged.
2. How long does an ACH payment take to post?
Typically 1–2 business days; schedule before due date.
3. Can I dispute a credit card convenience fee?
No—fees are set by the processor and disclosed before payment.
4. What if my bank rejects the ACH debit?
You may incur bank NSF fees and state penalties; ensure sufficient funds.
5. Are there daily ACH limits?
Confirm with your bank; adjust payment date or split transfers if necessary.