U.S. Largely Ceases Use Of Paper Checks

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A U.S. presidential executive order has greenlighted a long-time IRS paperless initiative for the American Internal Revenue Service and other agencies.

The U.S. federal government is getting rid of paper checks.

Beginning Sept. 30, the U.S. Department of the Treasury will stop issuing most paper checks, including tax refunds, Social Security and veterans’ benefits, vendor payments and other federal disbursements.

President Donald Trump’s Executive Order Executive Order 14247 requires nearly all federal tax payments and refunds to be made electronically after Sept. 30, 2025. After this date, the U.S. Internal Revenue Service will stop issuing paper refund checks, and you won’t be able to pay your federal income taxes to the IRS by a paper check. If you currently mail checks with your tax return, make estimated tax payments by check or receive refund checks in the mail.

If you already use direct deposit for refunds and pay taxes electronically, you won’t notice much difference. But if you’re one of those taxpayers who prefer traditional payment methods, you need to transition to an electronic method. Otherwise you risk delays in your tax payments, potentially generating late-payment penalties or delays in receiving refunds.

Proponents of this long-proposed move maintain that electronic payments and refunds are faster, more secure and less prone to loss or fraud than paper checks.

Cost motivates a shift

This represents a shift in how many taxpayers still make payments and refunds. If you currently mail checks with your return, make estimated tax payments by check or receive refund checks via mail, for instance, you’ll have to transition to an electronic method.

According to the Presidential order, using paper checks and money orders results in costs, delays, risks of fraud, lost payments, theft, and inefficiencies. It highlights that, historically, Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable or altered compared to an electronic funds transfer (EFT). The order adds that maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American government more than $657 million in FY24 alone.

Prepare now

There are IRS-approved electronic methods, but one requires a long time set up: 

• IRS Direct Pay – Free, quick, and allows direct debit from your bank account. No enrollment required, but changes after scheduling a payment do require calling the IRS. This may be the best option for individuals and small businesses dealing with the IRS.

·       Electronic Federal Tax Payment System (EFTPS) – Best for quarterly estimated payments. Requires you to have or create a login.gov or ID.me account, and EFTPS enrollment can take several weeks. Also note that irrevocable trusts are subject to the same electronic payment requirements but can’t use IRS Direct Pay or create an IRS Online Account (U.S Forms 1041, 709 and 706 also lack fields for direct deposit information). As a result, EFTPS is the only option for irrevocable trusts to make electronic payments.

• IRS Online Account – Lets you view balances, notices, and refund status in addition to making payments. Requires you to have or create an ID.me account, and again enrollment can take several weeks to complete.

Details still to iron out

Observers have said that a full adoption by Sept. 30 isn’t as likely as incremental rollouts beginning on that date instead. One sticking point: “hardship” cases for taxpayers lacking banking access and whether Treasury-issued prepaid cards will be automatic or require taxpayer opt-in. The Direct Express card, commonly used now by U.S. Social Security recipients, is one example of a card designed for people who do not have traditional bank accounts. (In 2023, 4.2% of U.S. households—about 5.6 million households— were unbanked.)

This transition also comes with warnings about potential scams. Taxpayers should only provide banking details through official channels like GoDirect.gov, SSA.gov or verified phone numbers. These sources will also never call or email to demand sensitive information.

Though fewer than 10% of taxpayers still receive paper checks, the IRS is clearly moving ahead on its long-term policy intention: Paper checks may soon go the way of paper tax returns.

Your tax specialist needs to stay on top of this and many other issues of wealth, foreign income and tax enforcement. We can recommend a firm who can open an account within 24 hours to receive tax refunds if needed. If we can help, please let us know.

About the Author 

Alicea Castellanos is the CEO and Founder of Global Taxes LLC. Alicea provides personalized U.S. tax advisory and compliance services to high-net-worth families and their advisors.

Alicea has more than 20 years of experience. Prior to forming Global Taxes, Alicea founded and oversaw operations at a boutique tax firm, worked at a prestigious global law firm and CPA firm.

Alicea specializes in U.S. tax planning and compliance for non-U.S. families with global wealth and asset protection structures which include non-U.S. trusts, estates and foundations that have a U.S. connection.

Alicea also specializes in foreign investment in U.S. real estate property, and other U.S. assets, pre-immigration tax planning, U.S. expatriation matters, U.S. persons in receipt of foreign gifts and inheritances, foreign accounts and assets compliance, offshore voluntary disclosures/tax amnesties, FATCA registration, and foreign companies wanting to do business in the U.S.

Alicea is fluent in Spanish and has a working knowledge of Portuguese.

Alicea is an active member of the Society of Trusts & Estates Practitioners (STEP), the New York State Society of Certified Public Accountants (NYSSCPAs), the American Institute of Certified Public Accountants (AICPA), the International Fiscal Association (IFA), a member of Clarkson Hyde Global, a world-wide association of accountants, auditors, tax specialists and business advisors and the Global Referral Network (GRN).

Distinctly, in 2020, Alicea was awarded with a prestigious NYSSCPA Forty Under 40 Award. She was selected as someone that has notable skills and is visibly making a difference in the accounting profession.

In 2021 and 2022, Alicea was the Gold and Silver Winner, respectively, of Citywealth’s Powerwomen Awards in the category USA – Woman of the Year – Business Growth (Boutique). In 2023, she continued her winning streak by receiving the Gold award for Company of the Year Female Leadership (Boutique) and the Silver award for Accountancy Firm of the Year at the Magic Circle Awards. Furthermore, Alicea has consistently secured her position in the Global Elite Directory for four consecutive years, being recognized as a Private Client Global Elite Advisor and is currently listed for 2024 as a Non-Legal Adviser. This exclusive directory annually highlights the world’s elite lawyers and outstanding wealth advisors serving ultra-high net-worth clients.

Please note: This content is intended for informational purposes only and is not a replacement for professional accounting or tax preparatory services. Consult your own accounting, tax, and legal professionals for advice related to your individual situation. Any copy or reproduction of our presentation is expressly prohibited. Any names or situations have been made up for illustrative purposes — any similarities found in real life are purely coincidental.