Compliance
Compliance Essentials for Businesses: Modernizing Payments & Paid Family Leave Updates
From new electronic payment mandates to how states with Paid Family and Medical Leave should report benefits—businesses need to stay compliant in several evolving areas in 2026.
By NomadicTax Research Team • 5-8 min read • March 1, 2026
## Changing Payment Rules: Executive Order 14247
The U.S. Treasury and IRS have mandated that **federal disbursements** move away from paper-based checks: direct deposit or digital payments are now the norm for individuals and businesses in most cases.([irs.gov](https://www.irs.gov/newsroom/prepare-to-file-in-2026-get-ready-for-tax-season-with-key-updates-essential-tips?utm_source=openai))
### What Businesses Should Do:
- Update payroll or refund systems to support **electronic payments**. Paper checks may still be used only in limited hardship cases.([irs.gov](https://www.irs.gov/newsroom/questions-and-answers-about-executive-order-14247-modernizing-payments-to-and-from-americas-bank-account?utm_source=openai))
- Ensure your bank and financial institution infrastructure is compatible with IRS and Treasury requirements. If you're a trustee or third-party payer making bulk payments, explore the available digital batch payment tools.([irs.gov](https://www.irs.gov/newsroom/questions-and-answers-about-executive-order-14247-modernizing-payments-to-and-from-americas-bank-account?utm_source=openai))
- Inform customers, vendors, and employees about the change to avoid delays or lost funds.
## Extension of Transition for Paid Family and Medical Leave Programs (PFML)
The IRS has extended the state employer transition relief under Revenue Ruling 2025-4 through **calendar year 2026**. This provides breathing room for states and employers to align systems for **income tax withholding, employment tax, and reporting** of medical leave benefits attributable to employer contributions.([irs.gov](https://www.irs.gov/irb/2026-02_IRB?utm_source=openai))
### Employer Action Items:
- Review benefits given under PFML, and confirm whether employer contributions to leave benefits are classified and reported as **wages** under Federal employment tax law. ([irs.gov](https://www.irs.gov/irb/2026-02_IRB?utm_source=openai))
- For calendar year 2026, adhere to transition rules: some withholding, reporting, and penalty obligations are **not enforced** during the transition year. So long as you follow the IRS guidance, employers generally won’t be penalized for failures during this year related to employer-contributed leave payments.([irs.gov](https://www.irs.gov/irb/2026-02_IRB?utm_source=openai))
## Digital Assets & Reporting: What Individuals and Small Businesses Must Know
As part of the filing season prep, taxpayers who have bought, sold or received cryptocurrencies, NFTs or stablecoins must report these digital assets—even if they receive Form 1099-DA, you must still answer the digital asset question on Form 1040.([irs.gov](https://www.irs.gov/newsroom/prepare-to-file-in-2026-get-ready-for-tax-season-with-key-updates-essential-tips?utm_source=openai))
## Suggested Compliance Checklist
- Update payroll and refund issuance methods to support direct deposit and electronic payment.
- Review state PFML statutes and benefit payment structures, especially for employer contributions, to ensure reporting compliance.
- Confirm recordkeeping of digital asset transactions, including purchase/sale dates, fair market values, and related gains/losses.
- Monitor IRS publications/websites for detailed guidance on digital payment options and employer obligations under PFML rules.
Staying ahead of these changes avoids penalties, cash flow issues, or audit exposure—especially for businesses operating across states or handling complicated benefit structures.