A new federal mandate will soon change how taxpayers receive refunds and make payments to the Internal Revenue Service (IRS). 

On March 25, 2025, President Trump signed an executive order directing the U.S. Department of the Treasury to phase out the issuance of paper checks for federal disbursements and to accelerate the transition to digital payment systems. As a result, beginning September 30, 2025 the IRS will no longer issue paper checks for tax refunds, and all payments to the IRS must be made electronically as soon as practicable and to the extent permitted by law. Exemptions will apply only in limited circumstances, such as for individuals without banking access, temporary non-U.S. individuals, those without a Social Security Number or taxpayer identification number, individuals over 65, emergencies, or certain national security and law enforcement activities. 

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Changes That May Affect You:  

Tax Refunds: After September 30, 2025, all federal tax refunds will be issued electronically via direct deposit to a U.S. bank account. The IRS will no longer mail paper refund checks except in limited approved cases. 

Tax Payments: All payments to the IRS, including estimated taxes, balances due, and other federal tax obligations must be made electronically through approved methods such as:  

• Direct debit from U.S. bank account (IRS Direct Pay) 

• Electronic Funds Withdrawal (when e-filing a return; federal and select state returns) 

• Electronic Federal Tax Payment System (EFTPS)  

• Debit or credit card payments (note: service fees may apply)  

• Digital wallets and real-time payment systems (where available) 

• International wire transfers (for non-U.S. bank accounts) 

Other Federal Agencies Affected: If you are still receiving a paper check for Social Security, Veterans benefits, or any other Federal payments, you will be required to enroll in direct deposit unless you qualify for an approved exemption.  

Bank Account Requirements:  

• Refunds cannot be deposited into foreign accounts. 

• The IRS limits the number (3) of direct deposits into a single account annually to prevent fraud. 

• A U.S. bank account will be required for most transactions.  

Steps for You to Take: 

1. Confirm Your U.S. Bank Account: If you do not already have a U.S. bank account, please open one to ensure timely processing of future payments and refunds.  

2. Verify Your IRS Records: Please confirm your current bank account information is accurate and on file with the IRS to avoid delays in receiving refunds.  

3. Enroll in Tax Payment Service: Consider Enrolling in Electronic Federal Tax Payment System (EFTPS) at www.eftps.gov. It is free, secure, and allows you to schedule and track payments easily.  

4. Begin Transitioning Now: If you currently rely on paper checks for refunds or payments, we encourage you to start transitioning to electronic methods ahead of the September 30, 2025 deadline. 

5. Special Cases—Employers and Global Mobility: If you handle tax-related payments or refunds on behalf of employees (such as in tax equalization programs), you may need to adjust your procedures.  

Exceptions:  

1. Individuals who do not have access to banking services or electronic payments systems; 

2. Certain emergency payments where electronic disbursement would cause undue hardship; 

3. National security or law enforcement related activities where non-EFT transactions are necessary or desirable; and 

4. Other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance.  

Taxpayers who cannot comply must be approved by the U.S. Treasury for an exception. We anticipate gaining greater clarity on the process once the implementation plan is officially released.  

Noncompliance: 
Failure to comply with the new electronic payment and refund requirements may result in delayed or unissued tax refunds, as well as payment processing issues that could lead to penalties and interest.  

Let Hansen Hunter help you 
Hansen Hunter recognizes that navigating these changes may present challenges, and we are committed to supporting you throughout this transition. If you have any questions about setting up electronic payments, updating your banking information, or how these updates might impact your unique situation, do not hesitate to reach out to us.  

Hansen Hunter will continue to monitor guidance from the IRS and the Department of the Treasury closely and will keep you informed of any significant updates. As always, planning ahead can help you maximize your financial position and better prepare for the future.