On March 25, 2025, the President signed an Executive Order (EO) that provides for a dramatic change to the way the U.S. Treasury will deal with paper-based payments. In a move to protect against fraud and increase governmental efficiency, as of September 30, 2025, paper checks will cease being issued by the Secretary of the Treasury. This is to include most federal disbursements, such as federal benefits payments (e.g. Social Security and veteran payments), vendor payments, and tax refunds.
In addition, the government will cease accepting paper checks as soon as possible, including all tax payments made by the taxpayers to the U.S. Treasury.
All agencies are directed to transition to a form of Electronic Funds Transfer (EFT), including direct deposit, prepaid card accounts, and other digital payment options, and take all steps necessary to enroll recipients in EFT payments. Debit and credit card payments and digital wallets, and real-time payment systems could also be used. To that end, the federal agencies affected by the EO will be required to submit a compliance plan, along with the Secretary of the Treasury which will be issuing an implementation report detailing its progress. Therefore, additional guidance and instruction will be forthcoming in the next few months.
The EO provides that exceptions will be made for individuals or entities who do not have access to banking services or electronic payment systems and/or other circumstances. However, this will require further guidance from the Treasury.
Recommended immediate action – enroll in an EFT
The federal government provides any number of EFT systems to pay taxes to the government. These include the use of EFTPS (Electronic Federal Tax Payment System), IRS Direct Pay or the use of the taxpayer’s on-line IRS account. It should be noted that signing up for certain of the above systems can take time, so it is recommended to start now. The EFTPS system, for example, requires that the Treasury mail a Personal Identification Number (PIN) to the taxpayer’s address of record to complete taxpayer sign up. This can delay signup. In addition, the above systems may not be available to all types of entities, therefore, it is important to begin the process as soon as possible.
With respect to tax refunds, certain taxpayers can request the Treasury to directly deposit the refund into a bank account with the filed income tax return.
Professional support and support with BPM
This Executive Order represents a significant shift in how federal payments and collections will be processed, with far-reaching implications for individuals, businesses, and tax practitioners. The transition to electronic-only payments will require careful planning and proactive steps to ensure compliance with the new requirements.
Given the complexity of these changes and the need for timely action, particularly regarding EFT enrollment, taxpayers and entities should consider seeking professional guidance to navigate this transition effectively. BPM’s tax professionals are closely monitoring developments related to this Executive Order and can aid with EFT enrollment processes, compliance planning, and addressing any unique circumstances that may require special consideration.
For more information about how these changes may affect your specific situation, or for support with implementing the necessary electronic payment systems, please reach out to BPM. Our team is prepared to help ensure a smooth transition to the new digital payment requirements while maximizing available options under the forthcoming Treasury guidance.
