IRS Elimination of Paper Checks (Executive Order 14247)

Summary

On March 25, 2025, President Trump signed Executive Order 14247, directing the U.S. Department of the Treasury to modernize federal payments by phasing out paper checks and shifting the federal government’s disbursement and collection processes to electronic formats.

Objective

Effective Date: Eliminates paper check disbursements AND receipts after September 30, 2025.
Transition all federal disbursements and receipts (tax refunds and Social Security checks) to electronic funds transfer (EFT) methods including direct deposit, prepaid cards, digital wallets, and real‑time payments.
Improve operational efficiency, reduce costs, and reduce fraud risk by phasing out paper checks, which are more vulnerable to loss or fraud than EFT methods.

Exceptions

Exceptions are allowed when electronic methods are not feasible, including:

Recipients without access to banking/electronic services (could apply to Social Security checks)
Emergency or hardship cases
National‑security or law enforcement needs
Other cases as deemed appropriate by Treasury

Such individuals may receive alternative payment options, such as paper checks or prepaid debit cards, if granted a waiver.

How does this affect you?

Individuals and businesses receiving federal payments will transition to electronic payment methods.
All payments to the IRS, such as tax liabilities, estimated tax payments, etc., must be made through electronic funds transfer (EFT) methods (IRS Direct Pay, EFTPS, debit or credit cards), unless a legal exception applies.
This applies broadly to both individual taxpayers and businesses making payments to the federal government, including the IRS.

Will there be a penalty for non-compliance?

There is no explicit civil or criminal penalty stated in the executive order for non-compliance by individuals or businesses. The order focuses on agency obligations by mandating that federal agencies phase out paper-based payments, transition to electronic payment systems, and report their progress. It does not impose penalties or fines on payers who fail to comply with the electronic payment requirement.

However, while the order doesn’t outline penalties or legal consequences for payers, non-compliance could lead to indirect consequences due to delayed processing or refund issues when payments are made with paper checks after the deadline.

AICPA Stance

The AICPA (American Institute of Certified Public Accountants) supports modernization but has cautioned that the mandate may pose significant challenges, particularly for vulnerable taxpayers, and has urged for modifications and flexibility in implementation.

A letter written to Treasury has addressed the following:

The proposed date of September 30, 2025 is too aggressive.
Requiring a U.S. bank account for electronic tax payments excludes vulnerable groups such as seniors, the unbanked, and non-U.S. residents.
The AICPA encourages automatic exceptions and transitional relief for those who face undue burdens in complying with the mandate.
They recommended that trusts and estates, temporary visitors, and individuals without Social Security numbers receive special consideration or exemptions until systems and tax forms are updated.

Conclusion

We continue to recommend setting up an online account with the IRS and your respective state taxing authority to make your estimated tax and balance due payments electronically. As an alternative, consider having your payments automatically withdrawn through Direct Debit when your return is filed.

If you do not have an online account with the IRS, you can go to their website (irs.gov) and use "Direct Pay" to make the payments. Paying electronically cuts down on fraud, reduces costs and speeds up processing of the payments.