The IRS Transition from Paper Checks: What Taxpayers Need to Know

In a significant move toward modernization and efficiency, the Internal Revenue Service (IRS) has announced that it will begin phasing out paper tax refund checks for individual taxpayers starting September 30, 2025. This transition marks a major step in the IRS’s broader initiative to move toward electronic payments for both refunds and payments made to the IRS.

Why Is the IRS Phasing Out Paper Checks?

The IRS’s decision is driven by several key factors:

1. Security: Paper checks are significantly more vulnerable to loss, theft, alteration, or delay compared to electronic payments. In fact, paper checks are over 16 times more likely to encounter such issues. Direct deposit and other electronic methods also reduce the risk of refund checks being returned as undeliverable.
2. Speed: Electronic refunds are much faster. Taxpayers who file electronically and choose direct deposit typically receive their refunds in less than 21 days, provided there are no issues with the return. In contrast, paper checks sent by mail can take six weeks or longer.
3. Cost and Efficiency: Electronic payments are more cost-effective and efficient for both the IRS and taxpayers. Processing paper checks involves more manual steps, higher administrative costs, and greater potential for errors.

What Does This Mean for Individual Taxpayers?

Filing Stays the Same:
Taxpayers should continue to file their returns as they normally would, using any of the existing filing options, including e-file and paper returns. The change primarily affects how refunds are delivered, not how returns are filed.

Refunds Go Digital:
Most refunds will now be delivered by direct deposit or other secure electronic methods. The IRS encourages taxpayers to ensure their banking information is up to date.

Payments to the IRS:
While the focus is currently on individual tax refunds, the IRS’s broader transition to electronic payments will eventually encompass other types of payments, including those made to the IRS. Taxpayers may continue to use existing payment methods, including paper checks until new guidance is issued. You can also make payments to the IRS electronically using the Direct Pay option on the IRS website.

How to Prepare for the Transition

• Check Your Banking Information: Make sure your direct deposit information is current and accurate when you file your tax return.
• Stay Informed: Watch for updated guidance from the IRS on IRS.gov and through official outreach channels.

For additional guidance on tax updates and financial strategies, explore our latest newsletters and blogs on the GHPIA Resources page.

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