Thursday, November 11, 2010

Government Contracts Used as Cash Cows to Nickle and Dime Taxpayers for Private Profit

Let's start this story with the Massachusetts law that prohibits charging extra for credit card transactions


"No seller...may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means."

Statute: Mass. Gen. Laws Ann. ch. 140D, § 28A(a)(2) (West)

Discounts for Cash Payments are allowed in Massachusetts

Discount offered to induce payment by cash, check or other means not involving a credit card not considered a finance charge if offered to all prospective buyers and disclosed clearly and conspicuously.

Statute: Mass. Gen. Laws Ann. ch. 140D, § 28A(b) (West)

Statutes cover: Credit cards only

Statute: (Mass. Gen. Laws Ann. ch. 140D, § 1 (West))

And yet...

Yesterday I went to City Hall to pay a state excise tax on my car. It turned out that they didn't accept payments for that there, so they referred me to the next town over, whose city hall has an electronic kiosk (a machine) where taxpayers can pay their excise tax.

I drove over to the other town. I didn't have the excise tax bill with me because I had misplaced it. Since it can be easily looked up using my driver's license number, I wasn't concerned.

I found the payment kiosk. It turns out not to be owned and maintained by the Commonwealth, but rather by a private company (Kelley & Ryan Associates) that, it seems, has a contract to collect various payments (like excise tax or parking tickets) owed to the Commonwealth.

I initiated my transaction, following a system of prompts that began by offering me a selection for taxpayers who didn't have their bill right there with them.

I entered my name, date of birth, and license number. Then I had to enter my Social Security number. This rubbed me the wrong way. I do realize that SS numbers are in fact taxpayer ID numbers. However, here in Massachusetts, we specifically have the option of not associating our SS number with our driver's license, and it should be very simple to accept my payment and associate it with my vehicle simply by using my license number.

I have no particular confidence that this electronic kiosk is managed in a secure-enough fashion to sufficiently protect my identity. That's why this method of requiring input of my SS number bothered me.

The next step was to enter a number printed exactly as shown on my bill. Wait, wasn't I in the processing flow for people who don't have their bill handy? Yes, I was. Anytime I see a system designed that badly, it greatly lowers my confidence in the general care taken to build the system. So at that point, I was certainly regretting having entered my social security number in the previous step.

Needless to say, I couldn't proceed with the transaction.

The kiosk was located right next to the payment window of the city Collector's Office. An employee of that office saw me standing there, and saw that I was leaving the kiosk without finishing. I guess she must see that a lot, because she called me over to the window to tell me that I didn't need to use the kiosk--that she could take my payment in person.

Great! A helpful, friendly civil servant. I gave her my driver's license and credit card, and after a few moments, she handed me a printed receipt. Mission accomplished!

Back home, I took the receipt out of my purse and went to file it in my desk. That's when I noticed that I'd been charged an extra 3% for an "online convenience fee." Huh?! I hadn't paid online. I hadn't even paid at their kiosk. I had paid in person at a city office. Right?

I phoned Kelley & Ryan Associates right away. I told them what had happened, and asked them why I'd been charged extra. The employee of Kelley & Ryan told me, "you have to pay extra to use a credit card. Three percent."

"Umm, that's illegal," I told her. "You know that, right? It's illegal in Massachusetts to charge someone extra for paying with a credit card."

She replied, "well, that's how it is; it's three percent extra."

Now, as I said, the receipt identified this extra charge as an "online convenience fee." When I first read that, I immediately suspected that this was really a charge for using a credit card. I thought it likely that Kelley & Ryan are well-aware of the Massacusetts law, and that they try to skirt it by pretending their credit card fee is some other kind of fee.

But the Kelley & Ryan employee made it clear--explicitly confirming to me that this was in fact an additional charge because I chose to pay with a credit card.

The law does allow a vendor to offer discounts for paying by check or with cash. I attempted to give Kelley & Ryan an out, and I asked the employee, "okay, well is there any way I can get a discount then?"

Not surprisingly, she answered me with a scornful tone. "No! No discounts!"

That about wrapped it up for me. Kelley & Ryan have an exclusive contract to collect government taxes from millions of residents of the Commonwealth, and they are illegally increasing the burden on the taxpayer by 3% for the (I'm guessing) millions of online transactions!

This stuff just infuriates me. It is wrong. It is corrupt. It is theft.

And it is just one more example of how American citizens are nickle-and-dimed by both private companies and public entities to drip 90% of them of every bit of available funds they have.

Companies like Kelley & Ryan profit at the public trough--illegally charging individual taxpayers, and I'll bet cumulatively overcharging the Commonwealth, to perform a service that could, and probably should, be kept in-house by the state.

Why should a private, for-profit company be allowed to collect taxes for the state? That they "enhance" whatever profit they already make through the terms of their contract, by illegally passing on their processing fees to the taxpayer, simply rubs copious amounts of salt where the Commonwealth is already hemorrhaging its treasure to outside vendors.

Imagine the outrage the Chamber of Commerce would express if the Commonwealth announced it was going to increase some tax by 3%. Why, the Chamber just poured all kinds of money into defeating the alcohol sales tax increase in Massachusetts by ballot initiative at last week's election. They wouldn't be able to stop quoting how many jobs would be eliminated by a 3% increase on whatever, and how many businesses would suffer.

Yet not a peep when a huge increase is levied by a private, for-profit company on a public tax obligation!

This blog post is the first step in my attempt to right this wrong--to recoup my 3%, as well as all the three percents that have illegally been levied on my Massachusetts compatriots.


  1. Thank you for this perfect description. It just makes me so angry. I've lived in other tax-heavy states, but Massachusetts just levies and levies and levies. I see a constant trickle of money leaking out of my pockets. It's satisfying to see that not everyone is blind to the problem, but I do wish we could -- like -- uh -- actually do something about it! Honestly. What can I do?!

  2. Thanks for your comment, American Yak. It's funny, because I grew up in a state that already had taxes above 8% back in the eighties, so MA has never seemed all that high to me--just from a straight *tax* perspective.

    But what you wrote, " a constant trickle of money leaking out of my pockets" is so very true.

    I think it doesn't change because the vast majority of taxpayers have been successfully herded into one of two political camps:

    1. Left-leaning, who hesitate to question government expenditures and who blame everything on large corporations.

    2. Right-leaning, who blame all ills on government and feel it might be "socialistic" to question a corporation's right to profits.

    Something Massachusetts does very well is to provide an example of how this Right/Left blame game gives cover to one particular demographic--the wealthy and well-connected.

    We need to shed our belief in this false dichotomy if we're ever going to change anything.

    Thanks for reading, and I hope you'll check back later tonight for my next post, which will detail another ridiculous public/private scam in Massachusetts.