IRS Announcement - Phase Out of Paper Tax Refund Checks

The Internal Revenue Service recently announced that the process of sending paper refund checks for individual taxpayers will be phased out beginning September 30, 2025. This change is part of a broader transition to electronic payment requirement and is required by Executive Order 14247.

This is not a huge surprise as technology continues to advance, it seems at times out of control. We have already seen a push for returns to transition from paper filings to electronic filings and in some cases mandatory electronic filing requirements. The majority of the returns (over 95%) we file here at HNG are already electronically filed and over 70% of those choosing electronic refunds. The bottom line is this train is not going to stop and ultimately ends up at an all electronic filing, refund and payment station. Those who have resisted will need to make changes to be able to have their refunds/payments processed by the IRS.

While some have certainly rejected this, we believe there are several positive aspects of this rule for most all of us as listed below:

  • Fraud protection – Paper checks are over 16 times more likely to be lost, stolen, altered or delayed than electronic payments.
  • Speed up refunds – Electronic refund payments are processed much quicker with taxpayers receiving their funds on average 21 days or less. Old paper refund checks can take up to 6 weeks or longer to be received.
  • Cut costs – Electronic refunds checks are much less costly to process than paper checks helping reduce government spending.
  • Easy set up – Switching to electronic refunds or payments is a pretty simple process, and requires you to provide your tax preparer with the account details you wish to use. Tax preparers are required to take measures to protect your identity for tax matters.

Some potential frustrations and potential downfalls to watch for include the following:

  • Access – There are some who still may have trouble with access to accounts. There appear to be alternatives for these individuals with options such as debit cards, digital wallets, etc. There is also access to free or low-cost accounts (FDIC.gov/GetBanked or MyCreditUnion.gov).
  • Ensure your tax preparer has entered your account information correctly. This should be reviewed before your return is electronically filed.
  • If you have had prior year problems electronically filing your income tax returns, contact your tax preparer to see if this can be worked out. Otherwise, it may take you an extra step or two to file your returns and get the refunds requested.
  • Consider re-organizing your account structure to help protect from cyber and fraud crimes against the funds in your accounts. Use a separate account for all electronic payments, so if your account is a victim of fraud you do not potentially lose all your funds, but only those minimal funds kept in the electronic account.
  • This will most certainly also result in the mandatory use of electronic funds for payments made to the IRS as well. This would include payment of estimated payments.

Further guidance will be provided by the IRS for 2025 tax returns before the 2026 tax filing season begins. Until further notice, taxpayers should continue using existing tax forms and procedures in filing their extended 2024 tax returns.

At Hirth, Norris & Garrison, we are committed to being a trusted partner in your financial and tax journey. Whether you are aiming to protect your personal finances, business information or enhance your personal tax filing process, HNG is here to guide you and answer questions as they arise. Don’t hesitate to contact us to learn more!

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