General Rule
To modernize payment to and from the U.S. Treasury, the president enacted Executive Order 14247 (the Order) on March 25, 2025.
In accordance with the Order, in the manner legally permitted, from September 30th, 2025 the Treasury will cease making paper checks for all Federal distributions including tax refunds and will establish electronic formats like direct deposit, digital wallet, real-time payment systems. Further phase out paper checks and paper-based receipts, to the extent permitted by law, and when in practice, all payments for the federal government, which includes tax payments must be processed electronically, rather than via cheque.
The Treasury has announced on August 14, that “the federal government will stop issuing paper checks for most federal payments on September 30, 2025.” For taxpayers hoping to receive a tax refund after this date, be sure that your tax return has the information needed to deposit direct your refund.
The Treasury has not yet announced an exact date by which Federal government officials will stop accepting checks as payment. However, the Treasury is taking actions to require all remittances to be made electronically. For taxpayers who are planning to be making tax payments in the months following September 30th, 2025 it is highly recommended that they make use of one of the electronic payment options that are listed by the Internal Revenue Service (IRS) website.
Exceptions
The Order includes a number of alternatives and accommodations for the required transition to electronic payment for:
- People who don’t have access to electronic payment systems
- Certain emergency payment situations where electronic transfer would create hardship
- National-security/Law enforcement related actions
- Other circumstances as determined by Secretary of the Treasury
Treasury has not released guidelines on how taxpayers may apply an exception to the Order, nor guidance regarding any additional exceptions deemed necessary by Treasury.
Comments From the Public
The month of May was when the Treasury requested comments on the implementation of the Order. In response, the American Institute of Certified Public Accountants (AICPA), American Bar Association (ABA) and others have replied with comments that raise concerns about the potential impact of electronic refunds for certain taxpayers. AICPA comments identify these taxpayer situations as needing particular attention before refunds by check are eliminated:
- People who are “unbanked”
- International taxpayers that may be restricted by financial regulations are not allowed to hold an account in a U.S. bank account
- Individuals who might be traveling temporarily within America and do not have U.S. identification numbers to create accounts at a U.S. bank account
- Executors of estates as well as trustees of trusts
- Taxpayers that may be eligible to receive an exemption in the Order, or for an additional exception formulated by the Secretary
The AICPA letter of comment also asks that Treasury hold off the implementation of the Order until there is guidance on the issues previously mentioned and a publicity campaign is able to be organized.
How Parr & Ibarra Can Help
As the Treasury continues to work to implement the Order, it is essential that taxpayers, to the extent that is possible, create their own plans to receive electronic refunds as well as paying tax electronically.
Need help with the new Order or tax laws? Tax advisors from our department are available to talk about the best ways to manage tax refunds.
