Updated note as of 1/30/2026*
The IRS recently issued clarification and answered common questions regarding the transition to electronic payments. We wanted to update everyone that the below article still has the most accurate information and is up to date with clarifications the IRS has made. The Treasury is still requiring most disbursements to be made electronically with limited exceptions and if taxpayers do not provide proper banking information, refunds will be delayed. The order also still applies to payments made to the IRS and taxpayers should prepare accordingly. For the upcoming filing season, checks and money orders will still be accepted as a temporary solution for payments made to the IRS, but this option will be permanently removed in most circumstances in the near future.
The IRS update can be found at the below link, and our office is continuing to monitor further changes and updates and we will keep you informed with any new developments.
https://www.irs.gov/pub/taxpros/fs-2026-02.pdf
Why now?
The mandate is a part of the current administration’s effort to reduce government spending and increase government efficiency. The Order notes that the cost to maintain the physical infrastructure and technology required to issue and receive paper checks was over $657 million in 2024. In addition, the Order sites security concerns as another reason to eliminate paper checks.
What does this mean for you?
Effective as of September 30, 2025, the Treasury will now require most Federal disbursements, including IRS tax refunds to be made electronically (through direct deposit, debit/credit cards, digital wallets, or real-time payment systems). The Order will impact all Federal disbursements, affecting millions of Americans in the coming year. In addition to tax related items, major areas affected by the Order include Social Security and, Veterans' Benefits.
With the September 30, 2025 deadline behind us and the IRS not providing tax payers with clear instruction on how the Executive Order would go into effect in a reasonable time period, the IRS has attempted to simplify the implementation by clarifying that all taxpayers should continue to use existing procedures for filing their 2024 tax returns. This means that if you still need to file your 2024 tax return, or are expecting to receive additional Federal disbursements and you do not have access to switch to receiving these items electronically, the IRS will still be issuing checks for the time being. However, this is a temporary solution, as detailed guidance for the upcoming filing 2025 tax returns and the full switch to electronic refunds are expected in the coming months.
Tax Payments: How you can prepare
The executive order also applies to payments made to the Federal Government such as estimated tax payments and balances due. The IRS clarified that for now, taxpayers should continue to use existing payment options such as checks or money orders to the Federal Government. As the IRS moves towards requiring electronic payments to the Government for tax payments, additional guidance will be released before the upcoming filing season.
The IRS has a Direct Pay option, allowing you to pay estimated payments or balances due directly from your bank account to the IRS, with no check required. If you have not already set up a direct payment option with your accountant, you can sign up for the IRS Direct Pay program on the IRS website at
www.irs.gov/payments.
Already set up? Verify your bank account information that is one file. If you work with an accountant to prepare your taxes annually or to pay quarterly estimates, it is a good idea to get in contact with them to ensure you are prepared for the transition.
Tax Refunds: How you can prepare
Taxpayers currently receiving refunds by paper checks must be ready to electronically receive future refunds. This is done by designating bank account information on filed tax forms directing the IRS where to directly deposit a refund.
Are there any exceptions to the Order?
The Order specifies some situations in which the Federal government will continue to allow paper checks to be issued in the future. Most notably, those who are without access to a bank account, or in certain emergency situations, may be exempt from the Order. Prepaid debit cards and digital wallets offer alternatives for those without traditional bank accounts.
There is expected to be additional guidance issued by the Treasury in the coming months in regards to this Executive Order. We are watching this issue closely and will keep you informed of any new developments.
Need additional help?
Contact our office today with any questions via email at
reception@mbkcpa.com or by phone at 413-536-8510.
