In an effort to modernize federal payment systems, Treasury and the current administration issued an executive order in March 2025, mandating that all federal payments, including tax refunds, must be made electronically beginning Sept. 30, 2025. Direct deposit, prepaid cards and other digital payment methods are included in the mandate. Here’s how this significant federal change may impact how you receive tax refunds or make payments to the Internal Revenue Service (IRS).
What’s Changing for Taxpayers
- Paper checks will no longer be accepted for tax refunds. The IRS will no longer issue your tax refund via a paper check, except in limited cases. If you currently receive refunds by check, you will need to switch to an electronic payment method, such as direct deposit, prepaid cards or digital wallets.
- Paper checks may not be accepted for tax payments made near the extended filing deadline of Oct. 15, 2025. If you originally planned to mail a check near the extended filing deadline, it is recommended you switch to an electronic method instead.
- There are limited exceptions for certain taxpayers. Individuals who do not have access to banking services, are involved in certain law enforcement or emergency scenarios or qualify under other legal exemptions are excluded from the mandate. However, such exceptions are rare and are required to have approval by Treasury.
How Taxpayers Can Stay Prepared
Both domestic and international taxpayers should make preparations in advance of Sept. 30, 2025. For U.S. taxpayers, the following actions are recommended:
- Create or update your IRS account with your correct banking information.
- Enroll in direct deposit for refunds through your tax software or tax preparer.
- Use IRS-approved electronic payment options (IRS Direct Pay, Electronic Federal Tax Payment System (EFTPS), IRS2Go mobile app).
- Avoid mailing paper checks to the IRS after Sept. 30, 2025, unless you qualify for exemption.
Foreign taxpayers paying U.S. income tax should also prepare for the federal mandate to take effect through these recommended actions:
- Be sure you have access to a U.S. bank account or a global bank account that supports U.S. ACH transfers.
- Only use IRS-approved international wire transfer options, such as EFTPS with international access or foreign bank wire transfers (via SWIFT, if supported).
Foreign taxpayers may want to consult with their tax advisor on further matters to maintain compliance with the rules to avoid delays in payment or penalties, especially if they own or operate a business domestically within the United States.
For more information, contact your Windham Brannon tax advisor, or reach out to Brandi Samuel.
