The IRS has long offered electronic payment and deposit options available to taxpayers, but many have continued to use the tried-and-true paper checks. Beginning September 30, 2025, paper checks will be no more as the IRS will no longer issue or accept paper checks.
Executive Order
A Presidential Executive Order (EO), Modernizing Payments To and From America’s Bank Account, issued in March 2025, puts an end to all taxpayers—businesses and individuals—sending or receiving paper checks from the Department of Treasury as of September 30, 2025.
From the EO, “…Effective September 30, 2025, and to the extent permitted by law, the Secretary of the Treasury shall cease issuing paper checks for all Federal disbursements inclusive of intragovernmental payments, benefits payments, vendor payments, and tax refunds,…As soon as practicable, and to the extent permitted by law, all payments made to the Federal Government shall be processed electronically…”
Electronic Refunds and Payments
With the IRS no longer issuing refunds via paper checks, all refunds will be made through direct deposit or other electronic methods. Additionally, all federal tax payments and estimated taxes must be made through electronic fund transfer (EFT) methods such as direct deposit, prepaid card accounts, or other digital systems. Taxpayers and vendors will no longer be able to mail in checks or money orders for payments to the IRS or Department of Treasury.
Challenges to Transition
One significant challenge to transition to electronic payments options is the existing “unbanked” population, those who don’t have traditional bank accounts. Millions of Americans remain unbanked for various reasons, including lack of access, mistrust of banks or high fees, according to the FDIC,
It is said to overcome this challenge the government may issue refunds on debit cards and encourage financial institutions to offer free or low-fee accounts for affected taxpayers. Taxpayers without bank accounts should take steps now to open bank accounts to avoid delays in receiving their refunds.
What Now?
For taxpayers who extended their Form 1040 and will be filing in October, you will need to ensure your bank account information is set up with the accounting/tax firm electronically filing your return or directly with the IRS whether you are anticipating a refund or still need to make 2024 tax payments. If you file a tax return after September 30, and you don’t include bank information on the return, your refund may be provided with a pre-paid debit card. If you choose to still send a check for your tax payments after the effective date, there are no specific published yet on the implications but one could anticipate your check may be returned and your tax payment may be deemed late after some grace period.
What About State Taxes?
This change only impacts your federal income tax. As of now Illinois, and other states around the country continue to accept and issue paper checks, in addition to having various EFT options available for taxpayers.
Beyond Taxes and Exceptions to the EO
Although our focus here is on federal taxes and the IRS, this EO encompasses all executive departments and agencies transitioning to EFT methods. There are a few exceptions and accommodations outlined in the EO, Section 4, including exceptions for those individuals without access to banking services and electronic payment systems, emergency payments, etc. that will need to be addressed on a case by case basis.
Contact Us
If you have been receiving and/or sending paper checks to the IRS for federal tax and need more guidance on what steps you need to take to ensure you take the necessary steps to prepare for this transition, we are here to help. For additional information call 630.954.1400 or click here to contact us. We look forward to speaking with you soon.
