Prepared by SL’s Tax Partners

On March 25, 2025, President Trump signed the Modernizing Payments To and From America’s Bank Account Executive Order.  Its goal is to phase out all paper-based federal payments and receipts—including tax refunds, payments, Social Security benefits, vendor payments, and lockbox receipts—in favor of electronic funds transfers (EFT) such as direct deposit, prepaid cards, real-time transfers, and digital wallets.

As a result of this executive order, the U.S. Treasury will stop issuing all paper checks for federal disbursements, including tax refunds, benefits, vendor payments, and intragovernmental payments by September 30, 2025.

Also per the executive order, Treasury will transition to exclusively processing receipts (e.g., tax payments) electronically “as soon as practicable.”  While the executive order does contain “exceptions and accommodations for the phase out of paper check disbursements and receipts,” they are very narrow and limited to:

• Individuals without access to banking services or electronic payment systems;
• Certain emergency payments where electronic disbursement would cause undue hardship;
• National security- or law enforcement-related activities where non-EFT transactions are necessary or desirable; and,
• Other circumstances as determined by the Treasury Regulatory guidance and administrative language regarding the implementation of the executive order is expected from the IRS later this year.

We continue to actively monitor IRS and Treasury updates, and will provide notification and further insight once guidance is issued.  In the meantime, we encourage taxpayers to review their bank accounts on file with the IRS to ensure seamless receipt of Treasury refunds after September 30th, as well as explore direct debit and other electronic payment options in anticipation of the eventual transition to EFT payments.

Please reach out to your trusted Smith Leonard advisors for further assistance, our team is here to help.