The End of Paper Refund Checks—and What It Means for Filing Season Prep

As we gear up for the 2026 tax season (officially opening next week on January 26), now is the perfect time to tune up on the IRS changes that every tax preparer must understand. These updates aren’t just procedural—they’re regulatory shifts that affect how you prepare returns and advise clients. Our Get Ready for Filing Season webinar will cover these changes and more, ensuring you’re ready to navigate the new landscape. 

One of the topics relevant for preparers in 2026 that will be covered in the Get Ready for Filing Season webinar is the elimination of paper refund checks to the push for electronic payments.

IRS Phases Out Paper Checks

Effective September 30, 2025, the IRS discontinued the issuance of paper checks for all tax-related refunds. All payments from the IRS will be made electronically via direct deposit, electronic funds transfer, prepaid debit cards, or other approved digital methods. Returns without banking info will still be accepted, but refunds will be delayed as the IRS issues a letter requesting bank details. If none is provided within 30 days, a paper check will eventually be issued about six weeks after filing to avoid interest payments.

Tax professionals must ensure that clients are prepared to receive refunds electronically using IRS Direct Pay or other authorized platforms.

Exceptions to the mandate may apply in limited circumstances, including hardship cases, national security-related transactions, and individuals without access to digital banking infrastructure. Practitioners should update intake procedures and client communications to reflect this transition.

This change was mandated by Executive Order 14247, aimed at boosting security, efficiency, and cost-savings. Anticipated benefits include faster refunds, typically within 21 days for e-filed, direct-deposit returns, and reduced fraud risk, as paper checks are 16 times more likely to be lost or stolen.

Payments

The same Executive Order directs the move to electronic payments to the IRS—but no deadline has been set.

Help your clients prepare for a paperless IRS

Encourage clients to consider these direct deposit methods.

• Bank account: Use checking, savings, mutual fund, or IRA account details (with trustee notification for IRAs).
• Prepaid debit cards: Many have routing/account numbers that accept direct deposits.
• Mobile apps: Some apps support direct deposit with routing info—check with their provider on proper entry.

If clients owe taxes, multiple electronic payment methods are available.

• Bank account payment: Schedule payments up to a year ahead or use IRS Direct Pay.
• Debit/credit cards or digital wallets: Fees may apply, and some payment types (like payroll taxes) may be excluded.
• IRS Online Account: Pay balances, estimated taxes, or offer in compromise fees through a verified account.
• Electronic Federal Tax Payment System (EFTPS): Available for individuals, businesses, trusts but requires enrollment so plan ahead.
• Electronic Funds Withdrawal: Often set up during e-file via tax software or a practitioner.

Lastly, clients who are unbanked, abroad, or have religious concerns may face challenges. Recommend free or low-cost banking services (e.g., via FDIC.gov/GetBanked or the Veterans Benefits Banking Program), or exploring U.S.-capable international banking. The IRS intends to issue guidance and allow limited exceptions for those unable to use electronic options.

Prepare your practice for the IRS’s electronic-only refund and payment mandate

• Start by reviewing your client intake process to ensure you’re collecting accurate bank routing and account information. This will help prevent delays and misdirected refunds once paper checks are no longer an option.
• Educate your clients early about the end of paper refunds and the benefits of electronic payments. Encourage them to set up e-payment options well before deadlines to avoid last-minute issues. Verifying banking details during preparation is critical, small errors can lead to significant delays.
• Finally, advise taxpayers to adopt secure IRS-approved platforms such as IRS Direct Pay

Join us January 28 for the Get Ready for Filing Season webinar where instructor Catherine Riddick will cover this topic and others to prepare you for what’s ahead this filing season. 

By Kelly Golish,  CPA
University of Illinois Tax School
Assistant Director, Tax Materials

Sources:

• Internal Revenue Bulletin: 2026-2 | Internal Revenue Service
• Treasury Announces Federal Government Will Phase Out Paper Checks on September 30th | U.S. Department of Treasury
• Modernizing Payments To and From America’s Bank Account | Federal Register
• Modernizing payments to and from America’s bank account | Internal Revenue Service
• Tips on Electronic Payment Options Available to Taxpayers as the IRS Phases Out Paper Checks | Taxpayer Advocate Service