Compliance
Digital Payments & Electronic Refunds: Preparing for IRS’s Phase-Out of Checks
IRS is accelerating modernization: starting **September 30, 2025**, paper tax refund checks are being phased out, and over time paper payments to IRS will be limited. Here’s how individuals and businesses can make sure they’re ready.
By NomadicTax Research Team • 5-8 min read • February 28, 2026
## Overview of the Policy Change
In response to **Executive Order 14247**, the U.S. Treasury and IRS are moving to modernize federal payments and refunds. A major step was phasing out paper-tax refund checks for individual taxpayers beginning **September 30, 2025**, as permitted under law. ([irs.gov](https://www.irs.gov/newsroom/modernizing-payments-to-and-from-americas-bank-account?utm_source=openai))
Also, incoming payments to the IRS—liabilities, fees, payroll deposits—are being required to transition to **electronic payment methods** over time. Checks and money orders will still be accepted in limited circumstances like hardships or legal requirements. ([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))
## What This Means for You
- **Faster refunds and increased security**: Direct deposit refunds typically arrive in less than 21 days. Mailed refunds can take up to 6 weeks or longer. ([irs.gov](https://www.irs.gov/newsroom/modernizing-payments-to-and-from-americas-bank-account?utm_source=openai))
- **Reduced risk** of lost, stolen, or misdelivered refunds. Paper checks are significantly more at risk. ([irs.gov](https://www.irs.gov/newsroom/modernizing-payments-to-and-from-americas-bank-account?utm_source=openai))
- **Digital payment options expanding**: IRS Direct Pay, digital wallets, credit cards, debit cards. EFTPS for businesses remains in place; individuals are being encouraged to use new online account options. ([irs.gov](https://www.irs.gov/newsroom/modernizing-payments-to-and-from-americas-bank-account?utm_source=openai))
## Action Items: Individuals
- Ensure your **bank or credit union account is ready**—open one if needed and get your routing & account numbers in hand.
- Provide your bank account information when filing your return—so you can get refunds via **direct deposit**.
- For those without bank accounts, explore federal programs to help open one (e.g., FDIC’s GetBanked).
- Double-check account/routing numbers carefully—mistakes cause delays.
## Action Items: Businesses / Tax Preparers
- Collect payment information from clients, including DONE earlier if paper checks are no longer viable for refund or payment.
- For payment obligations like payroll or tax deposits, align systems with electronic payment methods.
- For clients abroad or unbanked, plan ahead: wire transfers, international payment partnerships, or IRS-guided alternatives.
## Example Scenarios
- *Single Individual:* Jane files her 2025 return without providing bank account details. She’ll receive a letter and has 30 days to supply that info—if she doesn’t, after six weeks, a paper check is sent to avoid interest accrual. ([taxpayeradvocate.irs.gov](https://www.taxpayeradvocate.irs.gov/news/tax-tips/tips-on-electronic-payment-options-available-to-taxpayers-as-the-irs-phases-out-paper-checks/2025/10/?utm_source=openai))
- *Small Business:* XYZ LLC had been submitting payroll tax payments via mailed checks. With EFTPS required for certain deposits and new options pushing digital, they now set up the Business Tax Account or IRS Direct Pay to avoid delays and ensure compliance.
## Key Dates to Remember
| Event | Effective Date |
|---|---|
| Phase-out of **paper refund checks** (individuals) | September 30, 2025 ([irs.gov](https://www.irs.gov/newsroom/modernizing-payments-to-and-from-americas-bank-account?utm_source=openai)) |
| Sunset of EFTPS enrollment for individuals | October 17, 2025 ([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)) |
| Full requirement for electronic payments (incoming payments) | Throughout **2026**, exact timelines will vary and guidance will expand ([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)) |
## Tips to Avoid Surprises
- Watch for IRS letters asking for bank account info if it’s missing when filing.
- Keep your online IRS accounts up to date—mailing address, bank info, preferences.
- For international or unbanked taxpayers, proactively consult IRS guidance for alternative options.
**Category**: Compliance | Digital Nomad (for those abroad)
**Read on**: “Modernizing Payments To and From America’s Bank Account” and related FAQs. ([irs.gov](https://www.irs.gov/newsroom/modernizing-payments-to-and-from-americas-bank-account?utm_source=openai))