IRS Goes Fully Digital in 2025: No More Paper Checks or Money Orders
The IRS is undergoing a major digital transformation that will affect how all taxpayers in the U.S. – including those of us here in Houston, Texas – pay taxes and receive refunds. By the end of 2025, the IRS will eliminate paper checks and money orders in favor of electronic transactions.
Below we break down what exactly is changing, how it impacts individuals and businesses, key dates to mark on your calendar, and steps you should take to prepare. We’ll also highlight how SAS Tax & Business Solutions (right here in Houston) can help you navigate this transition with ease.
What’s Changing: IRS Transitioning to Digital-Only Payments and Refunds
No more paper checks for the IRS. A new federal mandate requires the IRS to stop issuing paper refund checks and stop accepting paper checks (or money orders) for tax payments by September 30, 2025. In other words, tax refunds will only be paid out electronically (for example, via direct deposit to your bank account or loaded onto a prepaid debit card), and any taxes you owe must be paid through digital methods.
This government-wide initiative aims to modernize payments for efficiency and security – paper-based payments like checks and money orders are costly and prone to theft or loss. In fact, Treasury officials noted that mailed checks are far more likely to go missing or be stolen compared to electronic payments, and eliminating them could save millions in processing costs.
Digital tax payments only. Starting in late 2025, if you need to pay the IRS (whether it’s your annual income taxes, quarterly estimates, or any other tax bills), you’ll have to use an electronic payment option instead of mailing a check. Acceptable IRS payment methods will include:
IRS Direct Pay – a free online system to pay directly from your bank account (no fees).
Electronic Federal Tax Payment System (EFTPS) – a secure government website (commonly used by businesses and individuals for tax payments).
Credit or Debit Card payments – which can be made online or by phone through IRS-authorized processors (note that processors may charge a small fee).
Digital wallets or payment apps – IRS plans to allow services like PayPal or Venmo through approved channels.
Wire transfers – an option for large payments or international payments (bank fees may apply).
Electronic refunds only. Similarly, the IRS will no longer mail out refund checks for tax refunds. If you’re owed a refund, it will be issued electronically via one of the following: a direct deposit to your bank account, a loaded prepaid debit card, or another digital payment method. This means that taxpayers expecting refunds must have a valid routing and account number on file or be prepared to receive a Treasury-issued prepaid card instead of a check in the mail.
The only exceptions to these rules will be very limited cases, such as individuals who have no access to banking, certain emergencies, or specific legal exceptions. But for the vast majority of taxpayers, paper checks will be a thing of the past.
Why the IRS is going paperless: The push to go fully digital is part of a broader effort to improve efficiency and prevent fraud. Paper checks are slower and can be stolen or lost, causing headaches for taxpayers and the IRS alike.
Going digital means faster service (electronic payments process in real time, and direct-deposit refunds arrive much sooner than mailed checks) and improved security. For example, the IRS notes that about 8 in 10 taxpayers already choose direct deposit for refunds because it’s the safest and fastest option. Electronic payments also cost less – handling a paper refund check costs taxpayers over $1 each, versus about 10 cents for a direct deposit.
Over millions of transactions, those savings add up and free up resources that the IRS can use to improve customer service. Overall, this change is a win–win: it cuts government overhead, and it should expedite refunds and processing for taxpayers.
Impact on Individual Taxpayers
Faster refunds – but you must have direct deposit set up. If you’re an individual taxpayer used to receiving a refund check by mail, it’s time to switch gears. After September 2025, the IRS will require direct deposit info (or an equivalent electronic option) to issue your refund.
Most people already use direct deposit, but if you don’t, failing to set it up could delay your refund or even prevent it from arriving at all. The IRS has warned that without an electronic payment method on file, your refund could be delayed or may not arrive. In practical terms, this means when you file your tax return, you should include your bank routing and account number in the refund section.
The good news is that direct deposit refunds are much quicker – often just a few weeks or less, whereas a paper check can take significantly longer to process and mail. So this change will likely get money back in your pocket faster, as long as you’re prepared.
No more mailing checks for tax bills. For taxpayers who prefer to pay their balance due by writing a check or buying a money order, note that this option is ending. Currently, many people mail a check with their tax return or payment voucher, especially older taxpayers or those uncomfortable with online payments. Going forward, you’ll need to pay electronically.
For many in Houston, this will be an adjustment – but it can be a positive one. Using IRS online payment systems is secure and provides immediate confirmation. You won’t have to worry about mail delays or a check getting lost. Plus, you can schedule electronic payments in advance to coincide with the due date, giving you peace of mind. If you’re worried about security, remember that the IRS’s Direct Pay and EFTPS are encrypted and trusted systems. In fact, this is the same system that handles Social Security direct deposits (over 98% of Social Security beneficiaries already receive their payments electronically).
If you absolutely cannot use any electronic method (for instance, you don’t have a bank account), the Treasury may allow limited exceptions, but these will be rare and likely require documentation. A better approach is to get set up with a basic bank account now (or a reloadable prepaid card that can accept deposits) so you’re ready for the new normal.
Greater use of IRS online tools. As part of the IRS’s digital shift, individual taxpayers are encouraged to make use of online resources. One key resource is the IRS Online Account portal, where you can log in securely to see your tax information. With an IRS online account, you can view your balance, make payments, see past tax records, and even receive certain notices electronically. This is very much like online banking, but for your taxes.
The IRS has been urging taxpayers to create these accounts because it streamlines communication – for example, you can check your refund status or set up a payment plan through your account without calling the IRS. For Houston residents, this means less time waiting on hold and more control over your tax info. If you haven’t done so, consider creating an IRS online account as part of your preparation for the 2025 changes (we outline steps to prepare later in this post).
Special situations – plan ahead. If you’re an American living abroad or a foreign national filing a U.S. tax return, pay extra attention. The new policy generally requires refunds to go to a U.S. bank account. According to tax experts, the absence of paper checks could be a challenge for those who don’t have a U.S. bank account – a refund can only be direct-deposited into an account with a U.S. routing number. So if you’re an expat or international taxpayer expecting a U.S. refund, you’ll need to maintain a U.S. bank account or work with the IRS on an alternative (such as a debit card or possibly an international wire, though that may involve fees). The same goes for paying taxes: for example, if you’re a foreign investor who owes U.S. tax, you might need to use an international debit/credit card or wire transfer if you can’t access U.S. banking. These are details to sort out before the deadlines hit, to avoid any last-minute scrambles.
Impact on Businesses and Employers
Businesses must use electronic tax payments. Many businesses are already accustomed to paying taxes electronically – for instance, federal payroll tax deposits have long been required to be made via EFTPS in most cases. However, some small businesses still mail checks for various tax obligations (like quarterly income tax estimates, excise taxes, or extension payments). By late 2025, all business tax payments to the IRS will need to be electronic, with very few exceptions. This means if your Houston-based business currently sends a check to the IRS for anything (even something like a $50 LLC fee or a quarterly Form 941 payment), you should transition to an online payment method. EFTPS is the go-to for many businesses because it’s free and lets you schedule payments in advance. If you haven’t enrolled in EFTPS, now is a good time to do so – enrollment is easy and gives you a login to handle all federal tax payments in one place. Alternatively, business owners can use business online banking to initiate ACH transfers or use credit cards for tax payments (though fees make cards less ideal for large tax bills).
Electronic refunds for business tax credits or overpayments. Businesses sometimes receive refunds too – for example, if your corporation overpaid estimated taxes or if you’re eligible for a refundable credit. Under the new system, the IRS will not mail refund checks to businesses either. Make sure that your company’s tax filings include up-to-date bank account information so any refunds can be direct-deposited. For instance, corporate tax returns (Form 1120) and partnership returns (Form 1065) have fields for bank routing and account numbers; you’ll want to fill those out. If you’re expecting a refund like the Employee Retention Credit or an overpayment carryback refund, ensure you’ve provided electronic deposit info to avoid delays. Just as with individuals, not having electronic info on file could mean a hung-up refund for your business.
Streamlined compliance and record-keeping. Going all-digital with IRS payments might actually simplify life for businesses in the long run. No more cutting checks, tracking mail deliveries, or dealing with paper payment coupons. All transactions will leave an electronic trail that you can easily save in your accounting system. This is a good opportunity to integrate your bookkeeping with digital tax compliance – for example, using accounting software that can interface with tax payment systems or at least record ACH payments automatically. If you’re a Houston entrepreneur who has been doing things the “old school” way, consider this the push to modernize your accounting workflow. Also, note that the IRS’s overall modernization means more of your interactions will be digital: the IRS is even implementing paperless processing for tax returns and correspondence, planning to digitize all paper-filed returns by the 2025 filing season. So, businesses should be prepared not just for digital payments, but also for more electronic communication (like e-notices) and digital record requirements. Ensuring you have secure email, up-to-date contact information, and an IRS online account for your business or its responsible officers will be important.
Payroll and withholding considerations. If you’re an employer, you likely already pay withheld payroll taxes electronically. Just double-check that you’re fully compliant with electronic filing and payment for all employment tax forms. The IRS will enforce these rules strictly, and Texas employers should be aware that paper Forms 940/941 with checks will be phased out. The same goes for any other taxes your business handles – for example, if you remit backup withholding or file excise tax forms. Also, encourage your employees to receive their IRS refunds via direct deposit (if you assist employees with tax prep or provide resources, this is a good tip to share). Texas doesn’t have state income tax, but Texas employers do handle federal withholding – so everything on the federal side is affected by this digital push. In short, businesses should view this as a chance to go fully paperless with the IRS across the board.
Timeline and Key Dates for the Rollout
It’s important to know the timeline of this digital transition so you can prepare accordingly:
March 2025: The plan for phasing out paper checks was formally announced via a Presidential Executive Order (titled “Modernizing Payments To and From America’s Bank Account”). This order set the direction for the IRS and Treasury to begin the transition. By spring 2025, the IRS and U.S. Treasury started public outreach about the upcoming changes.
Mid-2025: Throughout the middle of 2025, the IRS and Treasury will be ramping up awareness campaigns. The Treasury Department, for example, issued a public Request for Information in May 2025 to get feedback on how to best implement the changes and educate the public. During this period, you can expect to see reminders in IRS communications (like tax tips, press releases, and maybe even notices in the mail if you’re still getting paper correspondence) about switching to electronic payments and ensuring your direct deposit info is up to date.
**🚨 September 30, 2025: This is the big effective date. As of 9/30/2025, the IRS will cease issuing paper checks for any federal payments it makes, including tax refunds. This date also effectively marks the end of the IRS accepting mailed checks for payments (except for those special exceptions noted earlier). In practice, if you were planning to mail a check around this time (for example, an extended 2024 tax return payment or a 2025 3rd quarter estimated tax payment), you’ll need to use an electronic method instead. The end of September 2025 is essentially the cutoff point – after that, assume everything must be digital going forward.
Late 2025 transition period: There may be a short grace period or transitional handling around this date for stragglers, but don’t count on it. The IRS’s goal is to have everyone on board by the deadline. If you file a tax return after late September 2025 and forget to include direct deposit info for a refund, the IRS is likely to reach out for banking details rather than automatically issuing a check. Likewise, payments mailed after the cutoff might be returned or face significant processing delays. In Houston, the IRS has a regional mailing address for paper payments – expect that such P.O. boxes will start winding down operations.
2026 filing season (for Tax Year 2025): When we get to early 2026 and you’re filing your 2025 taxes, the new fully-digital system will be in full effect. The default on tax software will be electronic payment and refund. Tax forms might even be updated to emphasize electronic options more strongly. If any part of the transition had hiccups, they’ll likely be resolved by this point. Essentially, the April 15, 2026 tax deadline will be the first major filing deadline with no paper checks involved on either side (payments or refunds). We anticipate the IRS will heavily advertise the success of going paperless by then – possibly touting faster average refund times and reduced fraud incidents due to the change.
Keep in mind that alongside this timeline for payments, the IRS has other modernization efforts on similar timelines. By the 2025 tax filing season, the IRS also aims to achieve paperless processing for all tax returns, meaning even if someone files on paper, the IRS will immediately scan and digitize it. These efforts go hand-in-hand with eliminating paper checks – all part of bringing the IRS into a more efficient, 21st-century operation.
Key takeaway:Circle September 30, 2025 on your calendar. Make sure by that date you have everything set up for electronic dealings with the IRS. Don’t wait until the last minute – the earlier you transition, the smoother your tax life will be.
How to Prepare for the IRS’s Digital Shift: Steps for Taxpayers and Businesses
Change can be stressful, but a little preparation will go a long way toward making this digital transition easy. Here are some concrete steps both individual taxpayers and business owners should take in the coming months:
1. Set up your direct deposit information with the IRS. If you expect a tax refund for 2024 (or any future year), make sure to include your bank routing and account number on your tax return. You can usually find this section on the Form 1040. If you use a tax preparer or software, double-check that the direct deposit info is entered correctly. For those who don’t have a traditional bank account, consider opening a basic checking account at a local Houston bank or credit union (many offer free accounts). Alternatively, look into a reloadable prepaid debit card that provides you with a routing and account number – the IRS can deposit refunds to those as well. The IRS even suggests options like mobile payment apps or prepaid cards for those without bank accounts. The bottom line: have some way to receive funds electronically. This ensures you’ll get any future refunds without a hitch and typically much faster than a paper check.
2. Switch to paying taxes electronically. Start doing this now, even before it’s mandatory, so you’re comfortable by 2025. There are multiple ways to pay electronically:
IRS Direct Pay: You can use this free service to pay your individual tax bill directly from a bank account – no sign-up required, you just verify your identity each time. It’s perfect for one-off payments like when you owe taxes on April 15.
EFTPS (Electronic Federal Tax Payment System): This is especially useful for businesses and self-employed individuals who pay taxes regularly (estimated taxes, payroll taxes, etc.). You enroll at EFTPS.gov and once you have an account, you can schedule payments in advance and track payment history. Both individuals and businesses can use EFTPS, and it’s free and secure.
Debit or Credit Card: The IRS has authorized third-party processors that let you pay by card. This can be done online or even via phone. Keep in mind there’s usually a processing fee (around 2% for credit cards or a flat fee for debit). For a big tax bill, this fee might be significant, but for smaller payments or the convenience, it might be worth it.
Digital wallet payments: The IRS is exploring partnerships to allow payments through services like PayPal, PayPal Credit, and other digital wallets. By 2025, we may see more options in this space. If you’re already comfortable using such apps, look out for IRS announcements on approved channels.
Wire transfer: If you need to send a large sum or you’re an international payer, a bank wire might be an option. There’s an IRS process for same-day wire payments. This is more niche, but worth noting for business owners dealing in large payments or overseas accounts.
For Houston taxpayers, using these electronic methods means you won’t have to worry about mail delays (no more “the check is in the mail” issues!). Plus, you’ll have an immediate confirmation or receipt for your payment. We recommend trying a small electronic payment (say, your next quarterly estimate) to get the hang of it. And remember, if you schedule an electronic payment and later need to cancel or change it, both Direct Pay and EFTPS allow modifications or cancellations if done in time.
3. Create or update your IRS Online Account. We mentioned this earlier, but it’s worth repeating: set up an account on the IRS website if you haven’t already. It’s a secure portal where you can see your balance, make payments, view prior years’ tax records, and more. Having an online account will be increasingly important as the IRS moves to paperless correspondence and digital notices. For example, the IRS Online Account lets you receive certain notices electronically and respond to them online, rather than via mail. It’s also handy for retrieving your records (like getting a transcript if you need last year’s info for a loan, etc.). To create an account, you’ll go through an identity verification process (which can be done via the IRS’s smartphone verification system or by mail if needed). Once set up, make a habit of checking it periodically. It will show if you owe anything, if your payments have posted, and so on. Being proactive with an online account can prevent small issues from becoming big problems because you’ll have visibility into your IRS dealings at all times.
4. Ensure all your personal information is current. This includes your address, email, and bank info on file with the IRS. While the focus is on going digital, it’s still crucial that the IRS has your latest mailing address in case they need to reach you with something that can’t be delivered electronically (though those instances will dwindle). If you’ve moved within Houston or anywhere in the last year, file Form 8822 to update your address with the IRS. Also, when you set up your online account, provide an email if prompted – the IRS has promised more communication through email (e.g., notifications that you have a new secure message in your account, etc.). And again, double-check that bank routing/account number! A simple typo can cause a direct deposit to bounce, leading to delays (if a direct deposit is rejected, the IRS will revert to mailing a check to your last address, which could be very problematic if checks are generally discontinued). So accuracy is key.
5. Educate and adjust your bookkeeping (for businesses). If you run a business, inform your bookkeeper or accounting staff about these changes. They may need to tweak processes – for example, discontinuing the use of paper check ledgers for IRS payments and ensuring all tax payments are initiated through your accounting software or bank. It’s wise to document new procedures for how your company handles tax payments. Additionally, reconcile your bank statements carefully during the transition; you want to make sure an electronic tax payment is recorded in your books just like a check would have been. If you use accounting software like QuickBooks, set up the IRS as a vendor for electronic payments or utilize any built-in tax e-payment features. Essentially, make your financial systems “IRS digital-ready.” This will also help with cash flow planning – when you schedule electronic payments, they often debit on the due date, so plan your account balances accordingly (no more floating checks for a few days).
6. Seek guidance if you’re unsure. Change can be confusing, especially if you’re not tech-savvy or you have a special tax situation. Don’t hesitate to reach out for professional help. The IRS will have a helpline for electronic payment issues, and tax professionals (like CPAs, enrolled agents, or tax attorneys) will be up to speed on these changes. If you have an accountant handling your taxes, have a conversation with them about how you will handle payments and refunds in the new system. For example, if you typically drop off a paper check with your CPA to mail, find out what the new process will be – maybe the CPA can set up an e-payment for you with your authorization. Being prepared is especially important for those with more complex situations (like trusts, estates, or older individuals who might not use computers often). Family members might need to assist elderly taxpayers in Houston with setting up direct deposit or online accounts. It’s better to sort that out now than during the rush of tax season.
By taking these steps, you’ll ensure that when the IRS flips the switch to all-digital, you won’t even break a sweat. In fact, you might appreciate the convenience once you get used to it!
How SAS Tax & Business Solutions Can Help You Navigate the Digital Transition
Here at SAS Tax & Business Solutions in Houston, TX, our mission is to make tax and financial matters as stress-free as possible for our clients. Big IRS changes like this digital transition can seem daunting, but we’re here to help every step of the way – from getting you set up for electronic filing to providing ongoing support for all your financial needs. Here’s how SAS can assist:
Digital Tax Filing & Compliance: Our team stays up-to-date on IRS regulations, including this move to full digital operations. We will ensure that your tax returns are filed electronically (no paper hassles) and that your refund preferences are set to direct deposit. If you’re not sure how to set up things like IRS Direct Pay or an IRS Online Account, we can walk you through it or even handle certain tasks on your behalf. We make sure all our clients’ filings are compliant with the latest rules, so you won’t have to worry about a refund getting lost or a payment not going through. We double-check that your bank information and personal details are correctly included on your returns to avoid any glitches. In short, SAS takes the uncertainty out of the process – you can file with confidence knowing everything is optimized for the IRS’s digital systems.
Bookkeeping and Recordkeeping Support: Shifting to digital payments means your financial records need to be well-organized and up-to-date. Our firm offers comprehensive bookkeeping and accounting services to keep your books audit-ready and accurate. Through our service packages (like our Start-Up Membership for new businesses and entrepreneurs), we provide monthly bookkeeping, tax preparation, and financial reporting to ensure you always have a clear picture of your finances. Good bookkeeping is the backbone of smooth tax filings – when your income and expenses are tracked properly, making electronic tax payments or scheduling deposits becomes much easier. We help you integrate digital recordkeeping so that come tax time, uploading documents or responding to IRS inquiries online is a breeze. If you’re a small business owner in Houston feeling overwhelmed by the new requirements, know that our bookkeeping team can set up systems that practically automate your compliance. You focus on your business, and we’ll handle keeping the financial paperwork (digital or otherwise) in order.
Strategic Financial Guidance – CFO Services: Adapting to changes like these isn’t just about compliance; it’s also an opportunity to improve your overall financial strategy. Our CFO Basic service offers personalized financial guidance for small and medium-sized businesses. Think of it as having a part-time Chief Financial Officer on your side. With CFO Basic, we provide strategic planning, cash flow management, and compliance oversight. We’ll help you understand how going digital with the IRS can benefit your business’s cash flow (for example, leveraging faster refunds or better timing of tax payments). We can also develop cash flow models and budgets so that scheduling electronic tax payments doesn’t impact your business operations unexpectedly. For instance, we can plan your quarterly tax payment amounts in advance and set aside reserves, so when we schedule the payment through EFTPS, your business is prepared. Our team’s guidance will ensure your company stays compliant with the new IRS rules while also optimizing for tax efficiency. Essentially, SAS becomes your financial co-pilot – keeping an eye on deadlines (so you don’t miss a required electronic payment) and finding ways to save you money through smart planning.
Houston-Based Personalized Support: One advantage of working with SAS Tax & Business Solutions is that we’re local. We understand the unique needs of Houston-area taxpayers and businesses. Whether it’s considerations like the Texas Franchise Tax for businesses or the fact that many Houston entrepreneurs juggle multiple ventures, we tailor our advice to your situation. Our team is available for one-on-one consultations – we encourage you to give us a call or stop by our Houston office. We can sit down with you (in person or via a virtual meeting) and set up your IRS online account together, or show you how to make a payment online if you’ve never done it. Sometimes a 15-minute walkthrough with an expert can save you hours of frustration Googling instructions. We pride ourselves on being approachable and educating our clients. If you’re someone who likes to understand the process, we’re happy to teach you. If you’re someone who prefers to delegate, we can handle the heavy lifting and simply give you the results. Our goal is that you never feel alone in dealing with the IRS – we’re your advocates and partners in this.
All-in-one Solutions for Ongoing Peace of Mind: Beyond this immediate transition, SAS offers membership packages and services that ensure you remain in good standing year-round. For example, our Start-Up Membership is perfect for new business owners who want help with bookkeeping, taxes, and bi-annual financial reviews, so you never fall behind on compliance. For more established businesses, our CFO Basic service (as mentioned above) provides ongoing financial oversight – including making sure you adapt to regulatory changes like the IRS going digital. We also assist individuals (even if you’re just a W-2 employee with a simple tax return) through our Employee Membership or basic tax prep services. The key is, whatever your situation, we have a solution tailored for you. And all our services keep the modern, digital landscape in mind – we utilize secure client portals, electronic document signing, and digital communication, so working with us is efficient and convenient (no more piles of paper forms to fill out by hand!).
Local Houston focus: We know our community. Houston is a vibrant city with a mix of industries – oil and gas, medical, tech start-ups, you name it. SAS has experience across the board. We can advise a tech start-up in the Heights on setting up their QuickBooks for easy estimated tax e-payments, or help a family-owned restaurant in Katy ensure their payroll tax deposits are automated and on time. Being in Houston also means we’re attuned to things like hurricane season – if a disaster strikes (knock on wood) and the IRS grants extensions or special considerations, we’ll be the first to let our clients know and help them navigate those changes. Our personalized approach means you’re not calling a generic 1-800 number for help – you’re calling a trusted local advisor who remembers your name and understands your concerns.
Finally, we don’t just see ourselves as number-crunchers; we’re educators and coaches for your financial life. This IRS digital shift is a perfect example of something that might seem scary at first, but with the right guidance, it can actually empower you to manage your taxes more effectively. SAS Tax & Business Solutions is committed to guiding Houston taxpayers through changes like these so you come out on the other side confident and in control.
Ready to Embrace the Digital Tax Future? We’re Here to Help.
The IRS’s move to fully digital operations in 2025 is a big change, but you don’t have to navigate it alone. With the proper preparation and the right support team in your corner, you can turn this transition into an opportunity for a smoother, faster, and safer tax experience. SAS Tax & Business Solutions is ready to assist you in every aspect – from setting up direct deposits and IRS accounts to handling your bookkeeping and compliance needs year-round.
Have questions or need personalized guidance? Just reach out – we’d love to help our Houston neighbors get comfortable with these new processes. Give us a call at (832) 263-7308 or email us at [email protected] to schedule a one-on-one consultation. Whether you’re an individual taxpayer unsure how to pay online, or a business owner looking to streamline your finances, our friendly experts will provide clear, tailored advice. Don’t wait until the last minute – contact SAS today and let us help you go digital with confidence!
(Remember: The sooner you adapt to the IRS’s new digital system, the more seamless your tax season will be. We’re here to make that journey easier – every step of the way.)
