The Tax Times: Executive Order 14247: What IRS Payment Modernization Means for You and Your Clients

On September 24, 2005, we posted The IRS is Making a Major Shift: Say Goodbye to Paper Checks where we discussed The IRS will phase out paper checks for tax payments beginning September 30, 2025 and followed that up with our November 5, 2025 post Say Goodbye to Paper Checks: Get Ready for Mandatory Electronic IRS Payments in 2025 - IRS Goes Digital where we discussed a major shift is coming to how U.S. taxpayers send and receive money from the IRS.

Now the IRS has issued IR-2026-13 which describes how IRS has begun a major shift in how money moves to and from the federal government under Executive Order 14247, “Modernizing Payments To and From America’s Bank Account.” Starting with the 2026 filing season, the clear policy direction is that electronic payments and refunds will be the default, and paper checks will become the exception. For practitioners, this is less about how we file returns and more about how we get clients paid and how we help them pay.

What Is Executive Order 14247?

Executive Order 14247 directs Treasury, the IRS, and other federal agencies to transition federal payments—both incoming and outgoing—from paper-based to electronic methods, subject to existing law and limited exceptions. That mandate covers refunds, benefits, grants, vendor payments, and payments made to the government for taxes, fees, and penalties. The policy rationale is straightforward: electronic payments are faster, cheaper to process, and less vulnerable to fraud and error than paper checks and money orders.

Treasury is required to cease issuing paper checks for most federal payments by September 30, 2025, again with limited hardship and legal exceptions. Practically, this puts a clear time horizon on check-based workflows and makes it critical for taxpayers and advisors to modernize their banking and payment practices.

What Is Not Changing: Return Filing

One of the most important points from IRS guidance is what this Executive Order does not do: it does not change how taxpayers file their returns. E‑file, paper filing, and existing preparation practices remain in place, and the changes focus solely on the payment and refund rails, not on form preparation or submission. The IRS has stated that guidance for 2025 returns (filed in the 2026 filing season) will spell out the payment and refund procedures, but the core filing mechanics are unaffected.

For now, the IRS will continue to accept checks and money orders, even as it moves toward a fully electronic environment over time. The message for practitioners is to anticipate tighter electronic requirements but not to expect a sudden cutoff in traditional remittances overnight.

Refunds: Moving Away From Paper Checks

A central change is the gradual elimination of paper refund checks for most taxpayers. After September 30, 2025, the IRS generally will not issue paper refund checks where an electronic option is available, except in situations involving hardship, legal constraints, or procedural limitations. Individual taxpayers are expected to receive refunds via direct deposit, prepaid debit cards, or certain approved mobile apps if they lack traditional bank accounts.

If a taxpayer omits direct deposit information on a return, the IRS will still process the return, but the refund may be delayed. In those cases, the IRS plans to send Letter CP53E to the taxpayer’s last known address, asking for bank information or an explanation of why it cannot be provided. Taxpayers will be able to respond through their IRS Individual Online Account, where they can add or update banking details. For security reasons, IRS employees will not take direct deposit information over the phone or in person.

If the taxpayer does not respond to the CP53E letter and there are no other issues with the refund, the IRS will issue a paper check, but only after a six‑week waiting period. For practitioners, that delay is a concrete talking point when encouraging clients to provide accurate direct deposit information up front.

Payments to the IRS: Electronic First

On the payment side, the IRS is signaling a steady transition to electronic methods, even though it will continue to accept cash, checks, and money orders for now. The goal is to “fully transition” to electronic payments over time, subject to limited hardship and legal/procedural exceptions. Current electronic options include:

· IRS Direct Pay (from a bank account, with no processing fee)

· Individual Online Account and Business Tax Account payment options

· EFTPS (for those already enrolled)

· Debit or credit card and certain digital wallets

· Cash payments through the Vanilla Direct network at participating retailers, which the IRS treats as an electronic method once received into the system

A key procedural change is that EFTPS enrollment for individuals closed on October 17, 2025. Individuals who are not already enrolled will instead need to use IRS Online Account for Individuals or Direct Pay, and the IRS expects to require a full transition away from EFTPS for individuals later in 2026. For business taxpayers, Federal Tax Deposits must continue to be made electronically, and non‑electronic deposits can trigger failure‑to‑deposit penalties unless the taxpayer can show reasonable cause.

Business, Fiduciary, and International Issues

For business taxpayers, the modernization push extends to refunds as well as payments. The IRS plans to add direct deposit capability to most business return types after September 30, 2025 and will phase out paper checks for business refunds, except where electronic methods are unavailable or an applicable hardship or legal constraint exists. Payroll providers and other third‑party stakeholders will be expected to use electronic channels, with tools like the EFTPS Batch Provider system continuing to support bulk payments.

Fiduciaries—especially court‑appointed trustees and similar roles—occupy a special corner of the guidance. Where a trustee’s systems cannot handle the required electronic methods, the IRS will allow continued use of checks under the hardship/legal/procedural exception framework. However, the expectation is still that institutions and professionals will migrate toward whatever electronic solutions become available over time.

For international taxpayers, the IRS will keep existing methods in place while it builds out improved cross‑border solutions. The agency is working on partnerships with international payment providers and expanded wire and related options to improve speed, cost, and reliability for non‑U.S. accounts.

Action Steps for Practitioners

From a practice‑management standpoint, Executive Order 14247 and the related IRS FAQs translate into clear action items:

· Systematically collect and verify direct deposit information for all clients and incorporate this into intake and engagement workflows.

· For unbanked clients, proactively discuss low‑ or no‑cost bank and credit union accounts, prepaid cards, and approved apps that can receive electronic refunds.

· Encourage clients who pay balances due by check to migrate to IRS Direct Pay, Online Account payments, Business Tax Account, or other electronic options, and document that advice in your files.

· For estates, trusts, and court‑appointed fiduciaries, identify where systems can support electronic methods and where genuine hardship or legal constraints require continued use of checks, then document those constraints for future reliance.

· Educate clients that the IRS will not call, text, or email to ask for banking information and that legitimate requests (such as CP53E) will arrive by mail with instructions for responding through secure channels.

As Treasury and the IRS roll out additional technical details and system enhancements, firms that have already standardized on secure, electronic payment and refund workflows will be well‑positioned. The direction of travel is clear: fewer checks in the mail and more funds moving through verified electronic accounts—with corresponding expectations for taxpayers, practitioners, and financial institutions alike.

Have an IRS Tax Problem?