Heads-Up: IRS to Phase Out Paper Checks for Tax Refunds (Effective Sept 30, 2025)

Starting next year, the IRS will no longer issue tax refunds by paper check, a shift that will impact many taxpayers and businesses. Below is what you need to know, why this change is coming, and how to prepare.

What’s Changing

• Under Executive Order 14247, titled “Modernizing Payments To and From America’s Bank Account”, the U.S. Treasury has been directed to stop issuing and accepting paper checks for most government disbursements, including tax refunds and benefit payments.
  
  

• As of September 30, 2025, most refunds must be delivered electronically (e.g. via direct deposit).
  
  

• This requirement also applies to payments to the IRS (taxes owed, estimated payments, etc.), though the mandate to eliminate paper checks for payments is phrased as “as soon as practicable” rather than with a firm deadline. Paper payments are still acceptable for now.

Why the Government Is Making the Switch

• To reduce fraud, theft, and delays associated with mailed checks.
  
  

• Electronic transfers are considered more secure, traceable, and efficient.
  
  

• The administration believes eliminating paper checks will modernize the payments infrastructure and reduce costs over time.

Who This Impacts & What the Exceptions Are

Who’s Affected:

• Taxpayers who traditionally receive refunds by paper check will need to switch to an electronic refund method.
  
  

• Businesses and individuals making payments to the IRS will eventually be subject to similar changes.
  
  

Exceptions to the Rule:

Some taxpayers or payment scenarios may still qualify for non-electronic methods, including:

1. Individuals without access to banking or electronic payments
   
   

2. Certain emergency payments where electronic transfer would pose “undue hardship”
   
   

3. National security or law enforcement circumstances
   
   

4. Other cases as defined by future Treasury regulations

The Treasury has not yet issued detailed guidance on how exceptions will be handled.

What You Should Do Now

To make sure you (or your business) aren’t caught off guard, here are actionable steps you can take:

1. Ensure your banking info is up to date.
   Make sure your direct deposit info is accurate for refunds. If it changes (bank, account number, routing number), notify your tax advisor or update it on your tax forms.
   
   

2. Open a bank account if you don’t have one.
   If you’re unbanked, start the process of obtaining a checking or savings account now. The Treasury recommends using FDIC-insured banks or credit unions.
   
   

3. Monitor IRS/Treasury guidance.
   More details and regulations are expected. Watch for how exceptions will work and when payments (not just refunds) will become wholly electronic.
   
   

4. Adjust your internal processes (for businesses).
   If your business assists clients with tax refund handling, payroll, or financial reporting, begin integrating systems that lean toward electronic transfers.
   
   

5. Consult your tax or financial advisor.
   Especially if your situation is unique (e.g. lacking bank access, dealing with large refunds, or worried about compliance), get tailored guidance.

What This Means for APS Clients & Small Businesses

• Smoother refund delivery: Many taxpayers already receive refunds electronically, so for those individuals, the change won’t be disruptive.
  
  

• Reduced administrative overhead & risk: Fewer paper checks means less manual handling and lower risk of lost mail or fraud.
  
  

• Potential short-term friction: For clients or constituents who don’t have bank accounts or who rely on paper-based processes, there may be transitional challenges.
  
  

• Need for communication: Businesses, nonprofits, or community organizations should inform stakeholders (employees, clients, beneficiaries) about this shift to avoid surprises.

Bottom Line

By September 2025, paper checks for tax refunds will largely be a thing of the past. While many will barely notice this change, those who have relied on paper refunds must act now to ensure they receive funds electronically. As more guidance rolls out, we’ll help our clients stay ahead of compliance and maintain smooth operations through the transition.

If you have questions about how this change will affect you or your business, or need help updating your processes, please reach out, we’re here to help.

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Source: UHY Advisors,“IRS to Eliminate Use of Paper Checks for Tax Refunds,”September 2025.