IRS Moves Toward All‑Electronic Refunds: What Taxpayers Need to Know

The federal government is accelerating its shift away from paper checks, and the IRS is now taking a major step in that direction. As of September 30, 2025, the IRS has begun phasing out paper refund checks for individual taxpayers.

This change is part of a broader federal initiative requiring agencies to use electronic payments whenever possible.

How Refunds Will Be Paid Going Forward

Most taxpayers will now receive refunds through:

• Direct deposit to a bank or credit union

• Prepaid debit cards

• Digital wallets or mobile payment apps (if they provide routing/account numbers)

Paper checks will still be issued, but only in limited circumstances such as:

• Lack of access to banking services

• Emergency hardship situations

• Certain law enforcement or national security needs

• Other exceptions determined by the Treasury Department

The IRS plans to offer a dedicated phone line and online options for taxpayers who need to request a waiver.

Why the IRS Is Making This Change

Electronic refunds are:

• Much faster (typically within 21 days)

• Far more secure (paper checks are 16× more likely to be lost or stolen)

• Cheaper for the IRS to process

• Less likely to be returned as undeliverable

✅ Steps to Take Now

To avoid delays, taxpayers should:

• Provide valid routing and account numbers when filing

• Consider splitting refunds across up to three accounts using Form 8888

• Ensure their tax preparer has updated banking information

• Open a bank or credit union account if they don’t already have one

• Confirm whether their mobile app or prepaid card supports direct deposit

If a taxpayer files without banking information, the IRS will request it — and if there’s no response, the refund will still be issued, but with a six‑week delay.

What About Payments to the IRS?

Eventually, the IRS will also require all tax payments to be made electronically. For now, paper checks are still accepted, but electronic payment is strongly encouraged to avoid processing delays.

The Bottom Line

The IRS is moving toward a fully electronic refund system. For most taxpayers, this will mean faster, safer refunds. For those who rely on paper checks, now is the time to prepare for the transition.

If you need help setting up direct deposit or navigating these changes, Sharp Tax & Accounting LLC is here to support you every step of the way.