IRS Phasing Out Paper Refund Checks: What Tax Pros Need to Know

The IRS has confirmed a major shift in how it issues tax refunds to individual taxpayers: starting September 30, 2025, paper refund checks will begin being phased out in favor of electronic payments. This change is part of a broader federal initiative under Executive Order 14247 titled Modernizing Payments to and From America’s Bank Account.

For tax professionals, this change raises both logistical considerations and strategic opportunities. Below is what you should know—and what to do for your clients.

What’s Changing: Key Highlights

• No More Paper Refunds (for most taxpayers): Beginning September 30, 2025, the IRS will no longer issue refund checks by mail for individual taxpayers—except in limited, law-permitted cases.

• Faster & More Secure Refunds: Electronic payments are safer (less prone to theft, delay, alteration) and more efficient. The IRS states that paper checks are over 16 times more likely to be lost or stolen compared to electronic payments. Refunds via direct deposit (for electronically filed returns) can arrive in less than 21 days in many cases.

• Transition Options for Unbanked or Hardship Cases: Taxpayers who lack bank accounts or face hardship won’t necessarily be left behind. Alternatives like prepaid debit cards, digital wallets, or limited exceptions may be available.

• Filing Process Unchanged (for now): Taxpayers should continue their usual filing processes. The method of refund delivery is what’s changing—not how returns are filed.

• Upcoming Guidance: The IRS will issue more detailed guidance for 2025 returns before the 2026 filing season to clarify any new procedures.

  
  

Implications & Action Steps for Tax Professionals

1. Review Client Refund Methods

Check whether your clients currently receive refunds by paper check. If so, plan to update them to direct deposit or other electronic methods ahead of the transition.

2. Encourage Banking Setup

If clients don’t have a bank account, now is the time to help them open one (or explore prepaid or digital options) so they’re ready for electronic refunds.

3. Evaluate Hardship Cases

Some clients may qualify for exceptions (due to lack of banking infrastructure, extreme hardship, or other criteria). You may need to advise them on how to qualify for exceptions or alternative delivery methods.

4. Update Client Communication & Forms

Make sure your engagement letters, questionnaires, or intake forms capture bank routing/account information or alternative payment preferences.

5. Monitor IRS Guidance

Because the IRS will issue more detailed instructions before the 2026 filing season, stay alert for updates that may affect deadlines, acceptable methods, or special rules.

6. Leverage This as a Value-Add

Some clients may worry about the change—use this as an opportunity to reassure them, demonstrate your proactive service, and show them how you’re handling the transition so refunds stay smooth.

Final Thoughts

The phasing out of paper refund checks marks a big modernization step in IRS operations. While the shift brings challenges—especially for clients without banking access or with special needs—it also gives tax professionals a chance to guide clients through change and strengthen your role as a trusted advisor.

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Disclaimer: This article is for informational and educational purposes only and does not constitute legal tax advice. Advanced Tax Solutions is not liable or responsible for any damages resulting from or related to your use of this information. It is your responsibility to refer to official IRS documentation for information regarding any tax laws or tax information shown here.