IRS Paperless Payments: What Taxpayers Need to Know

The IRS is moving toward a more electronic tax payment system, and taxpayers should be aware of how the changes may affect future tax refunds and payments.

Under Executive Order 14247, Modernizing Payments To and From America's Bank Account, the federal government is transitioning toward electronic payments. The IRS began phasing out paper tax refund checks for individual taxpayers on September 30, 2025, while it continues working to reduce reliance on paper payments made to the IRS.

What Is Changing?

The transition involves both money coming from the IRS and money being sent to the IRS.

Receiving a Tax Refund

For individual taxpayers, paper refund checks are being phased out. The IRS encourages taxpayers to provide accurate banking information so refunds can be delivered electronically.

Direct deposit remains the primary method for receiving a refund. Depending on eligibility and circumstances, electronic refunds may also be directed to certain prepaid debit cards, payment apps or digital wallets that provide the necessary routing and account information.

The IRS says electronic refunds can also help reduce the risk of a payment being lost, stolen, altered or delayed.

What If You Don't Have a Bank Account?

Not having a traditional bank account does not necessarily mean you cannot receive an electronic refund.

The IRS identifies alternative electronic options, including certain prepaid debit cards and mobile payment applications. Taxpayers can also explore resources for opening low-cost or no-cost bank or credit union accounts.

Limited exceptions to the paper-check phaseout may apply in certain circumstances.

What About Paying the IRS?

The transition also applies to payments made to the IRS.

For now, the IRS continues to accept checks and money orders in many situations.

However, the agency is encouraging taxpayers to use electronic payment options and expects to continue reducing its reliance on paper payments over time.

Electronic options can include:

●     IRS Direct Pay

●     IRS Individual Online Account

●     IRS Business Tax Account

●     Electronic Federal Tax Payment System (EFTPS)

●     Credit or debit card options

●     Certain digital wallet options

Available payment methods depend on the type of tax or payment being made.

Businesses Should Pay Attention Too

Businesses are also part of this transition.

The IRS has been adding direct-deposit capabilities to business tax returns so that more businesses can receive refunds electronically. Paper refund checks for businesses are expected to be phased out over time, subject to applicable exceptions.

Businesses making certain federal tax deposits should already be using electronic payment methods. The IRS states that Federal Tax Deposits must be made electronically through approved channels.

Is Tax Filing Changing?

No.

The transition to electronic payments does not change the basic process of preparing or filing your tax return. Taxpayers should continue using the existing filing options unless the IRS provides different instructions for a particular filing situation.

The change primarily concerns how refunds are delivered and how payments are made.

What Should Taxpayers Do Now?

There are a few simple steps taxpayers can take:

1. Review Your Banking Information

Make sure your account and routing numbers are accurate when providing information for a tax refund.

Incorrect or missing banking information can create additional steps and potentially delay access to a refund.

2. Consider Electronic Payments

If you typically mail a check to the IRS, familiarize yourself with the electronic payment options available for your specific tax payment. Our team is happy to guide you on what needs to be provided during tax time.

3. Watch for IRS Notices

If the IRS needs banking information for a refund, it may send a notice through the U.S. mail. Taxpayers should be especially cautious about unsolicited phone calls or text messages requesting financial information. If you do receive an IRS notice we are here to help.

4. Don't Assume Every Payment Works the Same Way

Not every type of IRS payment is eligible for every electronic payment method. Always verify which option applies to the specific tax, form or payment involved.

The Bottom Line

The IRS is moving away from paper checks and toward electronic payments.

For taxpayers, the most important takeaway is simple: keep your banking information current and become familiar with the electronic payment options available for your tax situation.

The transition is ongoing, and the IRS has indicated that limited exceptions will apply in certain circumstances.

If you have questions about how these changes may affect your individual or business tax situation, contact our office.

This article is intended for general informational purposes and should not be considered individualized tax advice. IRS rules and procedures may change as implementation of the electronic payment transition continues.

Please feel free to share this with your relatives and friends and remember we are here to help our clients.

Terranova & Associates, LLC.