Key Takeaways
- Executive Order 14247 is shifting most IRS payments and refunds to electronic methods, reducing reliance on paper checks.
- Individual taxpayers and businesses are encouraged to use IRS online services, including IRS Online Account and IRS Direct Pay, for tax payments and refunds.
- Limited hardship and procedural exceptions remain, but taxpayers should update banking information and understand new electronic payment options to avoid delays.
The U.S. Department of the Treasury, in collaboration with the Internal Revenue Service (IRS) and other federal agencies, is transitioning federal payments to and from the government to electronic methods pursuant to Executive Order 14247, signed March 25, 2025. This directive is part of broader IRS electronic payment requirements and the government’s push toward modernizing payments.
These changes apply to:
- Payments sent by the federal government, including tax refunds, benefits, grants and vendor or contractor payments
- Payments made to the federal government, including tax balances due, fees, penalties and other payments from individuals, businesses, nonprofit organizations and state or local partners.
No changes are being made to the process of filing a tax return. Taxpayers will continue to file as usual using the same popular forms and processes.
Topic A: Individual Refunds and Disbursements
The IRS generally stopped issuing paper refund checks for individual taxpayers after September 30, 2025. Direct deposit into a bank account will remain the primary method for issuing a tax refund. However, if individual taxpayers don’t have access to traditional banking services, alternative electronic payment options will be available, including certain mobile apps and prepaid debit card solutions.
Limited exceptions to electronic payment requirements will be available in specific situations, such as those involving hardship and/or legal or procedural requirements.
If a tax return is filed without banking information, the following will occur:
- Tax return will be accepted and processed.
- The IRS will send a CP53E notice (an IRS notice specific to this issue) to the taxpayer.
- The taxpayer will have 30 days to either provide banking information or explain why such information can’t be provided.
- The taxpayer will need to enter their direct deposit information using the IRS Individual Online Account, which is part of broader IRS online services. IRS employees can’t take direct deposit information over the phone or in person.
- If there’s no response to the notice, the refund will be released as a paper check after six weeks, but paper checks are now the exception rather than the norm.
No changes will be made to how refunds are currently issued to deceased persons. The IRS will continue to accept or generate checks in accordance with the current practice.
Topic B: Payments to the IRS
For now, checks and money orders will still be accepted for tax payment obligations. However, the IRS strongly encourages taxpayers to make payments using existing electronic options, including electronic tax payments through IRS Direct Pay, electronic funds withdrawal when e-filing, and approved card payments.
Effective October 17, 2025, individuals are no longer able to create new enrollments via EFTPS.gov. Individuals can instead create an IRS Online Account for Individuals or use the IRS Direct Pay guest path to make one-time tax payments directly from a bank account. These tools support estimated tax payments, balance due payments and payment plan installments under an installment agreement.
For more context on how these IRS payment and refund changes fit into the broader landscape of electronic payments, see Creative Planning’s overview of IRS payment and refund changes coming.
Topic C: Businesses
In terms of how the phase-out of paper checks impacts businesses receiving refunds, the IRS will be adding the direct deposit option to most business returns in this first year of implementation after September 30, 2025. Over time, the goal is that most business tax payment and refund activity will be routed through secure electronic payment methods rather than paper checks and paper vouchers.
Impact on Third Parties
The IRS stated that tax professionals can make payments on behalf of clients and stay in compliance with Circular 230. Tax professionals can also advise taxpayers to pay directly through alternative electronic payment methods and still remain compliant with Circular 230, provided they clearly explain the electronic payment options available.
