IRS Electronic Payment Notice

IRS Updates: ACH & Electronic Payments
Date: August 18, 2025

The IRS and the U.S. Treasury are implementing significant changes to electronic payments, focusing on phasing out paper checks for most federal payments by September 30, 2025. The goals are to improve efficiency, reduce fraud, and cut costs associated with paper transactions.

Summary of Recent Updates
Mandatory Electronic Payments by September 30, 2025:

An executive order mandates a shift from paper checks to electronic payments for federal disbursements, including tax refunds. After this date, most payments to and from the IRS will need to be electronic.

• Emphasis on Direct Deposit for Refunds: Ensure your banking information is up to date with the IRS, as direct deposit becomes the default method for refunds.
• Electronic Payment Options Available:
  • IRS Direct Pay (bank account payments for individuals)
  • Electronic Federal Tax Payment System (EFTPS) (scheduling for businesses and individuals)
  • IRS Online Account (view balances and make payments)
  • Debit/Credit Cards via IRS-approved processors (fees may apply)
  • ACH Credit or Same-Day Wire via your financial institution (per EFTPS guidance)
• Potential Processing Delays: Some electronic payments may process after a notice is generated. If you receive a balance-due notice but paid electronically and on time, check your IRS Online Account for payment status before responding.
• Transition Challenges & Public Feedback: Treasury has sought public input on challenges (e.g., unbanked individuals).
• Automatic Payments for 2021 Recovery Rebate Credit: Around 1M taxpayers who qualified but didn’t claim the 2021 RRC will receive automatic payments by late January 2025, to the bank account on file or by paper check if no account is available. 

Key Takeaways for Taxpayers & Professionals

1. Embrace Electronic Payments: Expect refunds and payments to be electronic as paper checks are phased out by September 30, 2025.
2. Keep Banking Information Updated: Verify your routing and account numbers on file with the IRS.
3. Know Your Options: Use IRS Direct Pay, EFTPS, and your IRS Online Account.
4. Monitor IRS Announcements: Watch for additional guidance during the transition.
5. Address Notices Proactively: If you receive a balance-due notice after a timely electronic payment, confirm status in your IRS Online Account first.