In 1999 the IRS started letting Americans pay their income taxes with a credit card, and Official Payments ran the system. The California company charged a convenience fee on each payment, so the government paid nothing. It handled property taxes, parking tickets and court fines for state and local governments too. When it went public that November, it was a small company with one giant customer and a bank as its majority owner.

A Phone Line Finds a New Job

The business grew out of a company founded in 1986 to run phone systems for classified advertising. In 1996 it dropped that work to focus on government payments. Imperial Bank, its majority owner, gave it access to the card networks. The bet was that millions of citizens would pay a small fee for the convenience of a card, and that governments would welcome payments that cost them nothing to accept.

Sold for Three Dollars

Official Payments priced its IPO at $15 a share in November 1999 and listed on Nasdaq as OPAY. Revenue swung with tax season and leaned on a few big contracts. Its shares sank with the rest of the dot-com market. In 2002 Tier Technologies bought it for $3 a share in cash, about $74.5 million, gaining more than 1,200 government clients and the IRS contract.

Cover: The Income Tax, J. Lewis Marks. Art Institute of Chicago, public domain. Chosen for a satire of the income tax (paying the taxman).