If you typically receive your tax refunds—or any other type of US government payments—via paper check, you will need to start considering digital alternatives.
What happened?
On March 25, 2025, President Trump issued an executive order, called “Modernizing Payments To and From America’s Bank Account.” The order indicated the following:
“Effective September 30, 2025, and to the extent permitted by law, the Secretary of the Treasury shall cease issuing paper checks for all Federal disbursements inclusive of intragovernmental payments, benefits payments, vendor payments, and tax refunds, except as specified in section 4 of this order.”
This means that taxpayers who typically receive their federal tax refunds via check, as well as other government payments, will no longer be eligible to receive them in the mail by paper check after September 2025.
Instead, the order expressed a preference to promote digital payment methods, such as:
- Direct deposits
- Debit card payments
- Digital wallets and real-time payment systems
- Other “modern electronic payment options”
What do we know so far?
The order explains the types of payments that the Treasury would no longer make via check, the date the Treasury would stop sending checks, and certain exceptions.
The order lists the following exceptions and indicates that “individuals or entities qualifying for an exception under this section or other applicable law shall be provided alternative payment options”:
“(i) individuals who do not have access to banking services or electronic payment systems;
(ii) certain emergency payments where electronic disbursement would cause undue hardship, as contemplated in 31 C.F.R. Part 208;
(iii) national security- or law enforcement-related activities where non-EFT transactions are necessary or desirable; and
(iv) other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance.”
At the time of this post, the Treasury has not yet addressed details on how it will handle the exceptions or common obstacles.
Typically, government departments follow a standard process to flesh out the necessary details. In this case, those details remain scant.
On June 13, 2025, the National Taxpayer Advocate issued a request for comments to the Treasury on this order. The comments were due to the Treasury by June 30, 2025. As of the date of this post, the Treasury has not yet released the comments it received, nor has it issued any notices about hearings for proposed regulations.
Does the order apply to state refunds, as well?
The order does not apply to payments issued by individual states. State tax laws will still govern whether a state can or will send a paper check.
Which taxpayers will this order affect?
As of May 9, 2025, the IRS reports that 93,569,000 refunds were issued in the 2025 filing season. Estimates show that 6.4% of the refunds were sent via paper check, which equates to 5.9 million US taxpayers. Most of these taxpayers are individuals who either do not have access to a bank account or prefer not to share their banking information with the IRS.
If you filed an extension for your 2024 tax return, will this change affect you?
Yes, this change will most likely affect any taxpayers filing returns after mid-September 2025. As of the writing of this blog post, there are only two options:
- Provide direct deposit banking information on your tax return. The IRS’s current processing time for an electronically filed tax return is 21 days. Therefore, an electronically filed tax return notated as received by the IRS on September 8 or 9, 2025, may still be able to obtain a refund by paper check. Any tax return that is electronically filed and notated as received after that date may not be eligible.
If you do not provide direct deposit information on your return, and the IRS processes it after September 30, 2025, then you should expect a notice from the IRS providing options for receiving the refund. These options include but are not limited to an IRS debit card, digital wallet payment, or other type of electronic payment.
2. Indicate on your return that you would like your federal refund applied as a payment toward your next year’s tax liability instead of receiving it now as a refund.
If you only have a non-US bank account, how will this order affect you?
Currently, the IRS does not allow direct deposits into non-US accounts. However, language in the order indicates that the government might be moving in this direction. That said, until the IRS enables direct deposits into non-US accounts, the only options are to apply your refund as payment toward next year’s taxes or to set up a US bank account.
If you file amended returns that show a refund, how will this order affect you?
The IRS typically takes longer to process amended returns than original, timely filed tax returns. So, if you are filing amended returns after the date of this post, then you will already need to use a digital option, such as direct deposit to a US account, or apply your refund to your next year’s tax liability.
What happens if you qualify for an exception listed in the order?
The IRS has yet to publish any guidance that
- Outlines how you can or should notify the IRS that you qualify for an exception or
- Indicates what steps to take on your tax return to notify the IRS that you qualify.
At The Wolf Group, we recommend that you document your facts and circumstances if you either
- Do not have access to a US bank account or
- Have a hardship situation, such as residing in a federally or state-declared disaster area.
Once the IRS does release guidance, your supporting and substantiating documents, facts, and circumstances can assist in expediting requests for an exception.
What are next steps?
If you or your clients are accustomed to receiving paper checks for federal refunds, you should start considering digital alternatives for future tax filings.
The Wolf Group will continue to monitor the developments related to the order and IRS guidance as it progresses. We eagerly await and expect to glean helpful information from the eventual release of the public comments submitted to the Treasury in June 2025, future public hearings on the matter, review of proposed and final IRS regulations, and review of any non-binding IRS guidance released in this area.
