Acting in a non-disruptive way with a potential to change the way millions of the population in the US get their federal tax refunds, the IRS has initiated systematic measures to end issuance of all paper refund checks by the end of September 2025. Even though the executive order that was signed in March by President Donald Trump had a moderate amount of media coverage at the time, the new memos that were shared with us this week clearly showed that there was an internal concern with the fact that 2026 could still be the year when tens of millions of the tax-payers find themselves without the refund they were relying on for their household budgets.
The order from the Treasury calls for all tax refund payments to be completed electronically as of October 1, 2025. Meaning, that through direct deposit into private bank accounts, with the help of prepaid debit cards, or with the use of new digital wallet platforms. Paper checks will no more be in use except for maybe a few cases when an exemption is there, such as severe hardship or safety-related reasons.
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In short, it is the last chance for people who are still holding the checks sent via regular mail to decide to move to a different delivery method for their payouts.
IRS Internal Report Talks About the Danger of Mass Delays
Last week, an internal memo on the transition that the IRS sent to its regional offices was seen and it talked about the fact that some 19 million taxpayers were paid by check in 2024 and have not yet furnished the IRS with the correct information on their electronic paym
This community is being called “at-risk” for refund disruptions in case they decide to file early in 2026 without revealing their new payment choices to the IRS.
One IRS official who wished not to reveal his or her name and who claimed to have read the “report”, said, “Our intensity in doing this move is very high. The point is that, if people procrastinate like this and wait until this spring to file, it will be virtually impossible to timely validate or rectify these electronic routing errors in time.”
The issue is that missing or out-of-date bank details would cause not only weeks of delays, but also possibilities of refunds getting rejected and manual work backlogs. A defective or old banking data is dangerous to the taxpayer in many ways. It can lead to a long and tiring process of numerous work stages, including the substitution of paper checks.
What the New Refund Era Looks Like
In the last quarter of 2023, the refund process will completely depart from the paper world and switch to electronic processing. The Internal Revenue Service (IRS) has announced the following modes of distribution:
- Direct deposit into the verified checking or savings account
- Prepaid debit cards issued by the government to those eligible without bank access
- Third-party digital wallets, if granted final permission and rollout, for individuals without traditional banking setup
People who do not have an electronic form of payment must seek an exemption through a Treasury-managed process. The prerequisites are anticipated to be rigorous and decided in personby case basis afterwards.
The Hidden Danger: Inactive Bank Accounts
The memo has also raised concern about customers leaving bank accounts dormant. The same secret note informs about the high number of sequestered bank accounts among the previous refund recipients. Specifically, the data from the Department of the Treasury shows that 3.6 million bank accounts that were used for refunds in 2023 or 2024 are now closed, inactive, or mixed up with the wrong taxpayer.
In these cases, the IRS will not only not send a paper check in lieu of the digital transfer but will also return the money to the treasury account, and only if the taxpayer calls and verifies by updating their payment details will the money be transferred for the second time-a process that could last for a longer period of time during the tax season peak.
Treasury to Launch National Public Awareness Campaign
Besides, there is the Treasury Department going to hold a meeting this afternoon. The treasure division of the U.S. Treasury Department is about to publicly acknowledge through a series of campaigns the issues of the state residents. The program will encompass direct emails, text alerts, and local government level campaigns targeting taxpayers who still accept paper checks.
Additionally, tax software providers, financial institutions, and payroll platforms will be engaged to popularize the information.
However, experts point out that awareness by itself will not be sufficient.
“IRS notices are being tossed aside even though a notice can usually be the start of a resolution to any tax issue too far down the line. This is not a mere personal choice any longer. Definitely, it causes a big policy shift with the result of financial matters as well” said a previous IRS outreach officer.
What One Should Do before the Deadline
Here are the prompts from tax officers to the people.
- Go to IRS.gov and check your bank account details with the help of the “Where’s My Refund?” tool.
- Get an account at a local bank or open a savings account in the bank you have already.
- Look for bank-issued debit cards aimed at serving the unbanked community.
- Save the link of the Treasury’s official refund page for your future use when the rules are given there.
Non-compliance with the guideline by September 30, 2025, may lead to the delay of refunds in the 2026 filing season.
What You Should Do
The elimination of paper tax refund checks could soon be a new legislative reality instead of a far-fetched plan. Millions of individuals who don’t make the transition in the nick of time run a huge risk — that of having no access to their refund or at least, temporarily losing it. However, on the other hand, they can switch their choices through the online media to evade such delays in the future, the IRS suggests.
Now, many Americans who e-file their tax return look for words that resemble good news that they owe no tax or more with their refund. They feel anxious and unhappy if their refund is unexpectedly small. So, the message the IRS is sending out is straight and clear. Go digital today, and get your refund with minimum delay is their final words.
