A major change is coming to the federal government starting this fall. It has been announced that by September 30, 2025, the U.S. government will eliminate paper checks for all federal payments and collections, including IRS tax refunds and payments.
Individuals, businesses, and corporations will all be impacted.
Whether you’re an individual taxpayer waiting for your refund, a closely-held business submitting quarterly taxes, or a corporation managing complex payments, this change affects you. Pursuant to an Executive Order signed on March 25, 2025, starting this fall all payments to and from federal agencies must be made electronically. Paper refund checks and mailed-in tax payments will no longer be accepted.
Why the change?
This change is designed to:
- Reduce fraud by minimizing opportunities for check theft and forgery
- Speed up payments by eliminating postal delays and manual processing
- Cut government costs related to printing, mailing, and check handling
How you can prepare:
To avoid delays, errors, or even penalties, it’s essential to prepare for this transition before the deadline. Here’s how to get ready:
1. Set Up Direct Deposit for Refunds and Federal Benefits
If you are not currently set up to receive direct deposits from the government, now is a great time to enroll. Make sure you’re enrolled in direct deposit for tax refunds, Social Security benefits, and any other federal payments.
- For information on how individuals can set up direct deposit, read this article on the IRS website.
- For information on Form 8050 and setting up direct deposit for businesses, read this article on the IRS website.
2. Learn How to Use Electronic Tax Payment Tools
Familiarize yourself with secure online systems like:
- IRS Direct Pay for individual tax payments
- Electronic Federal Tax Payment System (EFTPS) for business and individual use
3. Stop Mailing Checks ASAP
Mail-in tax payments by check will no longer be accepted. The IRS recommends ending this practice well before the September 30 deadline to avoid disruptions.
4. Update Your Accounting Systems
Ensure your bookkeeping or accounting software supports electronic federal payments and is synced with your bank accounts for seamless processing.
5. Verify Your Banking Info
We recommend that you double-check that your bank account information is accurate and up to date on all tax filings and payment systems.
6. Exceptions for the Phase-Out of Paper Check Payments
Anticipating some issues with certain taxpayers being able to comply with electronic payments, the Secretary of the Treasury has offered some exceptions including:
- Individuals who do not have access to banking services
- Certain emergency payments where e-payments would cause undue hardship
- National security- or law enforcement-related activities
- Other circumstances as determined by the Secretary of the Treasury
Transition now for less frustration later.
Proactive preparation now can help you avoid headaches later. If you’re unsure how to transition your processes, consult your Wegner CPAs tax advisor or reach out to the IRS for guidance.
