Beginning September 30, 2025, a fundamental shift in how Americans interact with the federal government will take effect. Executive Order 14247, “Modernizing Payments to and from America’s Bank Account,” mandates that all federal payments and refunds must be processed electronically. For businesses and individuals who have relied on paper checks for tax payments and refunds, this represents more than a procedural change—it’s a transformation that requires immediate preparation.

Understanding the Scope of Change

The mandate affects all interactions with federal agencies, including the IRS, Social Security Administration, Department of Labor, and Defense Finance and Accounting Service. Here’s what you need to know:

For Tax Refunds: After September 30, 2025, the IRS will no longer issue paper refund checks. All refunds must be received via direct deposit to a designated bank account. This means if you’re filing an extended 2024 tax return after the deadline, you must provide banking information to avoid significant delays in receiving your refund.

For Tax Payments: All payments to the IRS must be made electronically “as soon as practicable.” While the order doesn’t specify an exact cutoff date for payment acceptance, the ambiguity itself creates risk. Our recommendation: transition to electronic payments immediately to avoid potential complications, interest, or penalties.

Electronic Payment Options: Choosing the Right Method for Your Situation

The IRS offers multiple electronic payment methods to accommodate different taxpayer needs and preferences. Understanding these options will help you select the most appropriate method for your specific circumstances and ensure a smooth transition from paper checks.

No Account Setup Required

IRS Direct Pay: This free service allows individuals and businesses to make payments directly from their U.S. bank account. It’s ideal for one-time payments such as balance due amounts when filing returns or quarterly estimated tax payments. Direct Pay is user-friendly and doesn’t require advance registration, making it perfect for taxpayers who make occasional payments to the IRS.

Debit and Credit Card Payments: The IRS accepts payments through approved third-party processors using debit cards, credit cards, or digital wallets like Apple Pay and Google Pay. While convenient, these options typically include processing fees ranging from 1.87% to 1.99% of the payment amount, with a minimum fee that varies by processor. For large payments, these fees can be substantial, so we recommend calculating the cost before choosing this option.

Phone Payments: You can make payments by calling the Electronic Federal Tax Payment System at 1-888-353-4537. This automated system accepts payments 24/7 and may be helpful for taxpayers who prefer not to make payments online. However, convenience fees typically apply.

Account Setup Required

Electronic Federal Tax Payment System (EFTPS): This free, government-operated system is often the most cost-effective option for regular tax payments. EFTPS allows you to schedule payments up to 365 days in advance and provides immediate confirmation of transactions. New account setup can take up to seven business days, so early registration is essential. We particularly recommend EFTPS for clients who make regular estimated tax payments or have ongoing tax obligations.

IRS Individual Online Account: This comprehensive platform requires ID.me verification for security but provides access to payment options as well as tax account information, payment history, and other useful features. It’s an excellent choice for taxpayers who want a complete view of their tax situation along with payment capabilities.

Electronic Funds Transfer Through Tax Software: Many taxpayers already use this method when filing returns electronically. Your tax preparation software can process payments by debiting your bank account directly. This seamless integration makes it an attractive option for return-related payments.

Recommendations by Client Type

For Government Contractors: We recommend EFTPS for its reliability, cost-effectiveness, and ability to schedule payments in advance. The system’s robust reporting features also support your documentation requirements for government contracting compliance.

For Small Business Clients: EFTPS or IRS Direct Pay work well for most small businesses. EFTPS is preferable if you make regular quarterly payments, while Direct Pay is suitable for occasional payments. Avoid credit card payments for large amounts due to processing fees.

For Individual Clients with Complex Situations: The IRS Individual Online Account provides the most comprehensive access to your tax information along with payment capabilities. This is particularly valuable for high-net-worth individuals managing multiple entities or complex tax situations.

For Nonprofit Organizations: EFTPS offers the best combination of cost-effectiveness and internal control capabilities. The system allows multiple authorized users and provides detailed transaction records that support your financial reporting requirements.

Setting Up Direct Deposit for Refunds

For taxpayers expecting refunds, you’ll need to provide your bank account information when filing your return. This includes:

• Bank routing number 
• Account number
• Account type (checking or savings)

We recommend using a checking account rather than a savings account, as some financial institutions have restrictions on savings account transactions that could delay your refund. Additionally, ensure the account will remain open and accessible when your refund is processed.

Security Considerations and Best Practices

While electronic payments are generally more secure than paper checks, we recommend these security best practices:

• Use secure, private internet connections when making online payments
• Verify website URLs before entering banking information
• Keep confirmation numbers and transaction records
• Monitor your bank account for unauthorized transactions
• Set up payment reminders to avoid late payments due to missed deadlines

Looking Beyond September 30, 2025

While the immediate focus is on compliance with the September deadline, we encourage clients to view this change as part of a broader digital transformation in financial services. The organizations that adapt most successfully will be those that embrace electronic payment systems not just for federal obligations, but as part of a comprehensive approach to financial efficiency.

This mandate also signals the federal government’s commitment to modernization and fraud prevention. Organizations that demonstrate technological capability and compliance readiness may find themselves better positioned for future opportunities, particularly in the government contracting space.

Your Next Steps

Don’t wait until the last minute to address this mandate. The most successful transitions happen when organizations prepare systematically and test their new processes well in advance of deadlines.

We recommend scheduling a consultation with us to:

• Review your specific federal payment obligations and refund expectations
• Develop a customized transition plan based on your organization’s unique circumstances
• Identify any internal control modifications needed for your new payment processes
• Ensure your accounting systems and procedures are optimized for the electronic payment environment

Our role is to help you navigate not just the compliance requirements, but to position your organization for success in the evolving financial landscape. Please contact our office if you have any questions.