The Tax Times: Say Goodbye to Paper Checks: Get Ready for Mandatory Electronic IRS Payments in 2025

A major shift is coming to how U.S. taxpayers send and receive money from the IRS. Starting with 2025 tax returns, the IRS will phase out most paper checks—and both individuals and businesses need to adapt. The IRS Taxpayer Advocate Service (TAS) has released tips to help taxpayers transition to electronic options for making payments and receiving tax refunds following the agency's decision to largely stop issuing paper check refunds after September 30, 2025, in accordance with Executive Order 14247, "Modernizing Payments to and From America's Bank Account.

"Here’s what you need to know, plus steps to make sure you and your clients are ready for mandatory electronic payments and refunds.

IRS To Phase Out Paper Checks: What Taxpayers Need to Know

The IRS is modernizing payments with the goal of moving all refunds and payments to electronic methods. Beginning with 2025 tax returns, most taxpayers will no longer receive refunds by paper check. Instead, direct deposit will become the default, offering faster and more secure processing. However, paper checks will still be available in some limited situations—for example, for those qualifying for an exception, but the process will take longer.

How Refunds Will Work

Taxpayers will need to provide their direct deposit information (account and routing numbers) when filing 2025 and later returns. Refunds can be deposited into checking, savings, mutual fund, IRA accounts, prepaid debit cards, or eligible mobile apps.

The IRS allows splitting a refund into as many as three different accounts using Form 8888. If you don’t provide direct deposit details, expect to receive a request from the IRS to update your information. If not provided, a paper check will be issued after about six weeks, delaying your refund.

Electronic Payment Options

· IRS Direct Pay: Simple, secure, and no login needed for paying directly from a bank account.

· Debit/credit card or digital wallet: Accepted with a possible processing fee. Not valid for payroll taxes.

· IRS Online Account: Individuals and businesses can make payments on outstanding balances online.

· EFTPS: The Electronic Federal Tax Payment System allows payments direct from bank accounts.

· Electronic Funds Withdrawal: Available when e-filing through tax software or a tax professional.

Foreign Taxpayers and Taxpayers Living Abroad

The guidance acknowledged that groups such as unbanked individuals, taxpayers living abroad, and those with specific religious beliefs may encounter difficulties with the transition. TAS advised unbanked taxpayers to explore low-cost banking options at FDIC.gov/GetBanked or seek assistance through the Veterans Benefits Banking Program.

Meanwhile, taxpayers living overseas were encouraged to seek international banking solutions that accept U.S. government payments, consult a tax professional, or contact the IRS if their bank cannot receive U.S. Treasury deposits.

Exceptions: Who Can Still Get Paper Checks?

The unbanked, those living overseas, or with certain religious exemptions may qualify for limited exceptions. The IRS will provide guidance before the next filing season on how to apply for an exception.

Action Steps for Taxpayers and Advisors

· Review and update direct deposit banking details before filing 2025 returns.

· Educate clients about this critical change—especially those who are unbanked or living abroad.

· For those needing a bank account, programs like the FDIC’s GetBanked initiative offer low-cost solutions.

· Watch for additional announcements from the IRS on exception processing and new requirements.

Get ready now because electronic payments are on the way to becoming the new IRS standard.

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