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08/26/2025
Electronic payments mandatory for federal disbursements by Sept. 30
As the deadline approaches, taxpayers must prepare for the transition to all electronic reimbursements and receipts.
Executive Order 14247, signed on March 25, 2025, mandates that all federal disbursements and receipts, including IRS tax refunds and payments, transition to electronic formats by Sept. 30, 2025, unless an exception applies. This includes direct deposit, prepaid cards, digital wallets, and other EFT methods. The goal is to reduce fraud, improve efficiency, and cut costs – paper checks, according to the White House, cost taxpayers over $657 million in FY 2024. Hence, taxpayers need to be prepared to electronically pay/receive federal tax payments/refunds.
Transition timeline
The current timeline for the transition:
- Sept. 30, 2025: Paper checks cease for most federal disbursements/receipts
- Oct. 15, 2025 tax deadline: It is advisable that taxpayers dialogue with their tax preparers to be set up to electronically pay/receive federal tax payments/refunds. Although implementation could be delayed, it is not advisable to expect a delay.
- Several prominent groups such as the AICPA (American Institute of CPAs) continue to advocate for delayed implementation to Jan. 15, 2026 to better align with “normal conduct” of taxpayers/tax preparers in executing on a tax year’s tax compliance responsibilities – especially given the continued perceived lack of taxpayer awareness of this change.
Implications for taxpayers
Starting this fall, all IRS payments and refunds must be electronic. Taxpayers should therefore:
- Become educated about the various available electronic payment platforms/methods:
- IRS Direct Pay
- EFTPS
- IRS Online Account
- Debit/Credit Card via IRS-approved processors
- ACH/Wire Transfers for high-dollar transactions
- Consider scheduling electronic debits for estimated tax payments when filing the return. Talk to your tax preparer about this possibility.
- For refunds, provide your tax preparer with bank account details (routing and account numbers) – via a secure method of communication
Exceptions to the rules
The Administration has provided for limited exceptions for:
- Seniors over 65
- Unbanked or underbanked individuals
- Non-U.S. residents and temporary visitors
- Trusts and estates (exception here is expected to be very short-term)
The Department of Treasury has instructed other federal agencies to refer to the Treasury Financial Manual (TFM), Section 2040, for guidance regarding these exceptions until new guidance is issued.
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Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.