Effective Jan. 1, 2016, the IRS will no longer accept check payments of an amount greater than $99,999,999.
This amount is the maximum that the Federal Reserve banks can process. During tax season 2015, the IRS processed 14 checks over $99,999,999.
After Jan. 1, 2016, two checks will be required if a taxpayer owes more than the maximum amount.
The problem is that the checks cannot go through the normal processing channels but must be manually processed – an inefficient method for the Federal Reserve banks. The check-processing equipment cannot process checks for these unusually large dollar amounts. When processed manually, the risks of fraudulent activity, processing errors and uncollectible funds are more likely.
In addition, these checks can be lost or stolen and require special handling procedures by Treasury General Account banks. It also takes much more time to process checks for large dollar amounts, which can result in customer late fees and penalties.
The IRS is encouraging taxpayers to use Fed Wire to make tax payments instead of sending in a large check.
The maximum amount of $99,999,999 applies to all federal agencies, not just the IRS. After the effective date of Jan. 1, 2016, large dollar checks will be returned to the federal agency that attempted to deposit it.