IRS Shifts Toward Electronic Payments and Refunds: What Taxpayers Should Know

The IRS is moving forward with a significant change in how tax refunds are issued and how payments are received. Under Executive Order 14247, the federal government is transitioning away from paper checks in favor of electronic payment methods. The goal is to improve security, reduce fraud risk, and streamline processing for both taxpayers and the government .

For many taxpayers, this shift may feel seamless. For others, especially those who still rely on paper checks, the change is worth closer attention.

Direct Deposit Becomes the Primary Refund Method

Beginning September 30, 2025, the Treasury Department began phasing out paper checks for federal disbursements, including IRS tax refunds. Direct deposit is now the primary method for receiving refunds. According to the IRS, most taxpayers already receive refunds electronically, and for them, the process of filing a return remains unchanged.

Taxpayers who do not provide direct deposit information can still file their returns as usual. However, refunds may be delayed while the IRS contacts them by mail to request banking information. The IRS has made clear it will not request this information by phone or text. Any outreach will occur through official mailed notices only.

If a return is filed claiming a refund and no direct deposit information is included, the IRS will take additional steps before issuing payment. Taxpayers can expect to receive a CP53E notice by mail requesting a response within 30 days. The notice will ask the taxpayer to either provide banking information or explain why electronic delivery cannot be used. The IRS may also display related messaging through the “Where’s My Refund?” tool on IRS.gov. For security reasons, the IRS will not collect direct deposit information by phone or in person. Taxpayers must submit this information through their IRS Individual Online Account or respond by mail. Once the information or an acceptable explanation is received, the refund will be released. If no response is provided and there are no other issues with the return, the refund will generally be issued as a paper check after several weeks.

Paying the IRS: Electronic Options Encouraged

The Executive Order also applies to payments made to the IRS. While paper checks and money orders are still accepted for now, the IRS is actively encouraging taxpayers and businesses to use electronic payment options. These options generally post faster, reduce processing errors, and provide immediate confirmation that a payment was received.

Available payment methods include IRS Direct Pay from a bank account, online IRS accounts, debit or credit cards, digital wallets, and other electronic systems. Over time, reliance on mailed payments is expected to continue declining, with limited exceptions for specific circumstances.

What This Means Going Forward

This transition does not change how tax returns are filed. It changes how money moves between taxpayers and the IRS. Taxpayers who prepare now by confirming their banking information and understanding available payment methods can reduce the risk of delays.

As with many IRS initiatives, additional guidance may follow as systems and processes continue to evolve. If you have questions about how these changes may affect your situation, a conversation with a trusted tax professional can help clarify next steps and timing.

Sources:

Internal Revenue Service. (2026, January). Questions and answers about Executive Order 14247: Modernizing Payments To and From America’s Bank Account (Fact Sheet FS-2026-02). https://www.irs.gov/pub/taxpros/fs-2026-02.pdf

KPMG International. (2026, January 28). GMS Flash Alert 2026-021: United States – IRS paper tax refund changes for 2026. https://kpmg.com/xx/en/our-insights/gms-flash-alert/2026/flash-alert-2026-021.html

Thomson Reuters. (2026, February 10). Technical update PREVIEW ISSUE – No. 2026-03 Five-Minute Tax Briefing® . (Item for Friday, January 30, 2026).

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