Key insights
- Federal tax refunds and payments are rapidly moving to electronic delivery, which can mean faster access to funds and fewer issues tied to lost or delayed checks.
- Taxpayers and businesses generally won’t see changes to how returns are filed, but they’ll need to adjust how refunds are received and payments are made.
- Understanding the IRS’s new electronic payment rules can help you avoid delays, confusion, and disruption as paper-based options are phased out.
Avoid surprises in an increasingly digital world.
The federal tax system is undergoing its most significant operational transition in decades.
With the issuance of Executive Order 14247, the Treasury and IRS are implementing a sweeping modernization of how money moves between taxpayers and the federal government. The order aims to eliminate paper checks and other physical payment instruments, reduce fraud, and accelerate transaction speed and security.
This shift to electronic‑first federal tax payments will affect how quickly refunds arrive, how payments are tracked, and how much manual work firms and businesses need to manage behind the scenes.
For many taxpayers, the biggest challenge is adjusting everyday payment processes before paper options quietly disappear.
What Executive Order 14247 means for federal tax payments
The order explains how paper‑based payments create unnecessary cost, delay, and vulnerability. It notes Treasury checks are 16 times more likely to be lost, stolen, or altered than electronic transfers, and digitizing these paper instruments cost taxpayers more than $657 million in FY 2024.
To correct these inefficiencies, the order mandates Treasury cease issuing paper checks for federal disbursements, including tax refunds and benefit payments. Paper checks will be allowed only when electronic delivery isn’t feasible or when specific legal exceptions apply. Agencies have been instructed to move incoming payments toward electronic systems as soon as practicable.
The order also clarifies it doesn’t authorize or establish a Central Bank Digital Currency (CBDC), underscoring its scope is limited to modernizing payment methods rather than creating new financial instruments.
The FAQs: What taxpayers need to know
Federal tax payment changes at a glance
- Filing processes stay the same
- Refunds are moving almost entirely to electronic delivery
- Paper checks are limited to narrow exceptions
- EFTPS access is changing for individuals
- Businesses may need to update internal processes
The IRS’s January 2026 FAQs translate the executive order into practical rules for taxpayers, businesses, international filers, and third‑party stakeholders.
Individual refunds
The IRS confirms the tax return filing process itself has not changed, but refund delivery has. The IRS has generally stopped issuing paper refund checks unless no electronic alternative is available, with electronic refunds offering faster and more secure delivery.
For unbanked taxpayers, the IRS will deliver refunds through prepaid debit cards and certain mobile‑based payment systems, with narrow exceptions permitting paper checks when necessary.
If a taxpayer files without direct‑deposit information, the IRS will send a CP53E requesting banking details or an explanation as to why electronic payment is not possible. If the taxpayer does not reply, a paper check will be issued after a six‑week delay; the IRS stresses it never seeks banking details by phone or text.
Payments to the IRS
The order applies equally to payments made to the IRS. Although checks and money orders are currently accepted, the IRS emphasizes electronic remittances via direct pay, online accounts, business tax accounts, card‑based systems, or digital wallets are the long‑term standard. Cash payments through Vanilla Direct also count as electronic for eligible transactions.
A major change concerns the Electronic Federal Tax Payment System (EFTPS). New individual enrollments have ended, and all individuals will be required to transition to other platforms. Businesses must continue using EFTPS for federal tax deposits, since such deposits can’t be made by cash or card.
Businesses and high-volume payers
The IRS is expanding direct‑deposit refund capability for most business returns, phasing down paper refund checks, and maintaining the EFTPS Batch Provider tool for high‑volume payers pending further development of digital bulk‑payment solutions.
International taxpayers
Current payment and refund processes remain available, but the IRS is expanding partnerships with international payment providers to support faster refund access abroad, while wire transfers continue to be available for payments and additional cross‑border capabilities are being developed.
Third‑party stakeholders
Third‑party actors including trustees, fiduciaries, and payroll providers must prepare for fully electronic payment transmission, with the IRS offering training, webinars, and technical support — allowing paper checks only when electronic methods are unavailable or where hardship or statutory requirements justify exceptions.
How CLA can help with tax payment changes
CLA works with taxpayers, businesses, and advisors to translate these electronic‑first requirements into practical next steps. That includes reviewing current payment and refund workflows, identifying where paper‑based processes still exist, and helping teams adjust systems and client communications before issues arise.
For many organizations, a short upfront review can help avoid delays, rework, and confusion later. CLA’s tax payments sites webpage offers a centralized resource with direct links to federal and state tax payment portals.
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