What You Need to Know Before Sept. 30, 2025

By Sept. 30, 2025, the IRS and every federal agency will no longer issue paper checks for tax refunds, payments or federal disbursements. Understanding this transition is important if you run a business and want to avoid surprises come year‑end.

What’s Changing and Why It Matters

An executive order signed in March 2025 titled Modernizing Payments to and from America’s Bank Account mandates that federal payments, including tax refunds and vendor payments, must go electronic by Sept. 30, 2025.

This isn’t just tech for tech’s sake—there are hard-dollar benefits:

  • Paper checks are 16× more likely to be lost, stolen or corrupted than electronic transfers
  • In Fiscal Year 2024, maintaining check infrastructure cost taxpayers over $657 million
  • Going digital slashes processing times, minimizes fraud and frees up resources for faster refunds and receipts

Refunds Shift to Digital by Default

For businesses and individuals, the key change is this: you will no longer receive a paper refund check. Instead, refunds will be delivered through:

  • Direct deposit to a U.S. bank or credit union
  • Prepaid debit cards
  • Digital wallets (such as PayPal or Venmo, as IRS systems expand)

You can still mail paper checks to pay the IRS at this time. However, the clear direction is toward electronic payments, and more guidance could come in the future. If rules change regarding mailed checks, we will communicate updates promptly.

What This Means for your Business

Managing cash flow means knowing how and when you’ll receive funds. Here’s how this transition affects business owners:

  1. Refunds Shift to Digital by Default

Refunds will now be directed to:

  • Direct deposit (domestic bank or credit union)
  • Prepaid debit cards
  • Digital wallets—potentially PayPal or Venmo, as IRS systems expand
  1. Check your Tech Stack

Ensure your accounting software and filing systems can:

  • Handle electronic refund preferences
  • Support Direct Pay or EFTPS transfers
  • Accept digital refund delivery methods
  1. Update your Workflow
  • Reconcile faster. Electronic payments show up instantly—streamline bookkeeping.
  • Strengthen controls. Monitor vendor changes, banking updates and refund destinations to prevent fraud.
  • Train staff. Anyone managing your tax filings should be familiar with IRS electronic systems and deadlines.

Special Situations—Know the Exceptions

Not everything flips to digital immediately. Exceptions exist—for example:

  • Individuals/businesses without bank access
  • Emergency payments where EFTs pose hardship
  • National security or law enforcement‑related payments

But for business owners, exceptions will likely be rare. If you do need one, federal agencies are still ironing out guidance.

 

You’ll reduce risk, switch to faster payment cycles and likely save on transaction and admin overhead. Plus, for business owners still relying on older check-based systems, this is your cue to update financial operations. Contact an Adams Brown tax advisor to discuss your situation.