The federal government is taking significant steps toward modernizing its payment systems, and taxpayers need to be prepared for the upcoming changes. Executive Order 14247, signed on March 25, 2025, titled “Modernizing Payments To and From America’s Bank Account,” initiates a transition from traditional paper-based methods to electronic payments for federal transactions.
How the Transition to Digital Payments Impacts Taxpayers
Starting September 30, 2025, the U.S. Treasury will no longer issue paper checks for federal payments, including tax refunds, benefit distributions, vendor payments, and more. Instead, all federal disbursements and collections will move to electronic methods, such as direct deposits, prepaid cards, digital wallets, and other electronic payment platforms. As we prepare your tax return, we will be requesting banking information to facilitate the processing of any refunds to be deposited directly into your bank account. In addition, tax payments including balances due, payments on notices and estimated tax payments will be required to be paid digitally as well.
Benefits of Moving to Electronic Federal Payments
This shift is designed to protect taxpayers and streamline government operations by reducing costs, minimizing delays, and significantly lowering the risk of payment fraud and theft. With Treasury checks being 16 times more likely to be lost, stolen, or altered compared to electronic funds transfers, the benefits of digital payments are clear.
How to Prepare for the Digital Payment Deadline
To avoid disruptions, taxpayers should take action now by:
- Ensuring their banking and payment information with federal agencies is current and accurate.
- Setting up direct deposit or alternative electronic payment methods as soon as possible.
- Reviewing the options available for payments to be made to the IRS including any balances due with the October 15th deadline and for the 4th quarter estimated tax payment due in January 2026. If you have not done so already, we encourage you to create an online tax account. Available payment options can be found on the IRS payment webpage.
The government recognizes exceptions for individuals without banking access, emergency circumstances, or specific national security-related payments. However, the vast majority of taxpayers are expected to transition to electronic payments seamlessly.
Need Assistance with Electronic Payments?
Lanigan Ryan is here to support you through these changes. If you have questions about how this executive order impacts your personal or business tax situation, please contact us. We’re committed to helping you navigate this transition smoothly and securely.
Stay ahead of the curve—switch to electronic payments today!
