Ron Skalberg
In a sweeping modernization move, The Department of the Treasury plans to end or sharply limit paper checks for most federal payments by September 30, 2025, transitioning to electronic methods to the extent permitted by law. This stems from the Executive Order titled Modernizing Payments to and From America’s Bank Account, signed on March 25, 2025.
What the Executive Order Requires
- Elimination of paper disbursements: By the September 2025 deadline, the Treasury is directed to stop issuing paper checks for nearly all federal payments—including tax refunds, Social Security, vendor payments, and reimbursements—except in limited situations allowed by statute or policy.
- Mandate for electronic receipts: Beginning as soon as practicable, agencies must ensure that payments tothe government—such as tax remittances, fees, and penalties—are processed electronically where legally permissible.
What Payments Are Affected
Starting September 30, 2025:
- Federal-issued refunds and benefits: Paper checks will be phased out for most recipients. Payments will primarily be delivered via direct deposit, prepaid debit cards, digital wallets, or other electronic systems, with exceptions for unbanked individuals, emergencies, or other authorized cases.
- Taxpayer remittances: Tax payments—including estimated, balance-due, or extension payments—are expected to be electronic after 9/30/2025. Final IRS and Treasury guidance will specify any exceptions or transitional relief.
- Other federal transactions: Payments and receipts across federal agencies—including fees, fines, licensing payments, and vendor reimbursements—must be electronic.
How to Transition: Electronic Payment Options
For Tax Receipts (payments to the IRS):
- Direct Withdrawal: Set up for electronic withdrawal when we complete your tax return—for estimated or balance payments.
- IRS Direct Pay: Free bank account transfer; no pre-registration needed.
- EFTPS (Electronic Federal Tax Payment System): Ideal for scheduled future payments; enrollment takes time, so act early.
- Debit/Credit Card or Digital Wallet: Available online or via phone through authorized processors (fees may apply).
For Tax Refunds and Federal Disbursements (payments from the government):
- Direct Deposit: Most efficient and widely adopted.
- Prepaid Debit Card (e.g., Direct Express®): For those without bank accounts.
- Digital Wallets and Other Electronic Transfers: Where supported by the paying agency.
Special Considerations & Advocacy
- “Unbanked” population: Millions lack bank accounts; they may rely on prepaid debit cards or need help opening low-cost accounts.
- Trusts, estates, and fiduciaries: Many IRS forms lack direct deposit fields. The AICPA has recommended exceptions and enhancements—such as allowing IRS Direct Pay for fiduciaries and delaying enforcement until Form 1041 is updated. (The Treasury has not yet announced formal relief.)
- Taxpayers overseas: Direct deposit to foreign accounts is generally unsupported—expect further guidance or exceptions.
Frequently Asked Questions
Q: When will paper checks stop?
A: By September 30, 2025, most federal payments and receipts will be electronic.
Q: Which payments are affected?
A: Social Security, tax refunds, vendor reimbursements, and federal fees/fines.
Q: Will there be any exceptions?
A: Yes, including unbanked individuals, certain fiduciary accounts, emergencies, and statutory carve-outs.
Q: How can I pay taxes electronically?
A: Options include IRS Direct Pay, EFTPS, direct withdrawal, or debit/credit card (fees may apply).
Q: How will I receive federal payments?
A: Direct deposit, prepaid debit cards (e.g., Direct Express®), or digital wallets where available.
Q: What about overseas taxpayers?
A: Direct deposit into foreign bank accounts isn’t generally supported; the Treasury is expected to issue further guidance.
