In March 2025 President Trump signed the “Modernizing Payments To and From America’s Bank Account” executive order. This order will halt the acceptance of paper checks for federal government payments, as well as end the federal government’s use of paper checks for payments. While this order affects payments across the government, an especially relevant issue is how it will change tax payments and refunds to and from the IRS.
The executive order cites issues of fraud and inefficiency as the primary reason for this change. The order cites a statistic that paper checks are currently 16 times more likely to be reported lost or stolen, or to be otherwise undeliverable than an electronic funds transfer (EFT). The order also notes that the infrastructure for the federal government to issue and process paper checks cost $657 million in 2024.
Whatever the justification for the order, this will have wide reaching effects on businesses and individuals, so it’s important to understand your options.
This executive order affects all payments to and from the government, with a small list of exceptions being made for individuals without access to banking services, some kinds of emergency payments where electronic transfers aren’t feasible, national security or law enforcement-related payments, as well as some other cases as determined by the Secretary of the Treasury. In short, most taxpayers will be expected to make the switch away from paper checks.
If you already use direct deposits and EFTs for your tax payments and refunds, then you have little to worry about. However, many individuals, businesses, and trusts still utilize paper checks for these purposes as they can be easier to manage alongside your financial advisors and accountants, especially for businesses and trusts.
If you do work with a third party for your personal or business tax preparation, it’s important to contact them and get an understanding of how this executive order will affect your tax payments and refunds going forward.
If you do currently use paper checks for your tax payments or refunds, you’ll want to get educated on EFTs and Direct Pay. It is a good idea to set up direct deposits with the government for your personal and business payments (which also include Social Security). To learn more about how to set up direct pay as an individual you can read this article from the IRS. If you just need to learn more about setting up direct deposits for your tax return, you can do so here. If you need to set up direct deposits as a business, you can learn more from the IRS here.
A Direct Pay option exists for many types of payments required for businesses. This system does not require the more complex registration of the EFTPS system outlined below but does have its limitations and is not an option for trusts. You can find a list of business payments possible with Direct Pay and learn more about using the system here.
For payments related to trusts (and business payments not accepted via Direct Pay) you will need to familiarize yourself with the Electronic Federal Tax Payment System (EFTPS). This system does require some setup and will involve the issuance of a code for logging in, which must be mailed to the taxpayer from the IRS. Because of this, it’s a good idea to get this set up well in advance of tax season. You can get started with EFTPS here.
Unfortunately, the IRS does not have an easy method of providing access to an EFTPS account for multiple users. If you work with accountants and financial advisors you’ll want to develop a plan with them as soon as you can to decide how to handle payments. Sweeney Conrad clients can reach out to their service teams for more information.
Finally, you’ll want to halt paper checks immediately, as the government has indicated that they will stop accepting them completely by September 30th.
While it can be frustrating to begin the process of phasing out your paper check payments to the government, developing a process for electronic transfers now will save you stress in the long run.