On September 23, 2025, the U.S. Internal Revenue Service (IRS), in coordination with the U.S. Department of the Treasury (the Treasury), announced paper tax refund checks for individual taxpayers will be phased out starting September 30, 2025,1 in accordance with Executive Order 14247,2 to the extent permitted by law. The IRS also announced that it will publish detailed guidance concerning both refunds and tax payments for the 2025 tax year prior to the 2026 filing season.
WHY THIS MATTERS
This development is significant for global mobility programs that currently rely on paper checks for tax equalization processes, including receiving refund checks and making tax payments on an assignee’s behalf. As noted above, the announcement states that the IRS will publish detailed guidance concerning both refunds and tax payments for the 2025 tax year prior to the 2026 filing season, which is expected to open in late January 2026. Global mobility programs presently relying on paper checks for the payment and equalization process will need to work with their tax service providers to quickly transition to a new process once this guidance becomes available.
IRS to Phase Out Paper Tax Refund Checks Starting with Individual Taxpayers (IR-2025-94)
Tax Refunds
Beginning September 30, 2025, individual taxpayers will no longer receive paper checks, except in limited circumstances permitted by law. Refunds will be issued primarily via direct deposit or other secure electronic methods.
Taxpayers are directed to continue using existing forms and procedures until further notice. This applies to individuals filing their 2024 returns on extension of a due date prior to December 31, 2025.
Most refunds will be delivered by direct deposit or other secure electronic methods. However, for those without access to bank accounts, options such as prepaid debit cards, digital wallets, or other limited exceptions will be available. The IRS recommends taxpayers make sure they know their banking information or consider opening an account if possible.
The IRS will publish detailed guidance for 2025 tax returns before the 2026 filing season begins (which is expected to open in January 2026).
KPMG INSIGHTS
Besides noting that it will be issuing additional guidance for 2025 before the start of next filing season, the IRS announcement does not provide any new information regarding the implementation of Executive Order 14247 and there continues to be uncertainty as to how the order will affect 2024 tax returns currently in process or yet to be filed.
As noted above, for 2024 tax returns on extension, the IRS directs taxpayers to continue to use existing forms and procedures until further notice, which would include Form 8888, Allocation of Refund, the form that permits a taxpayer to request a paper check refund.
For assignees who timely filed their returns consistent with IRS directions, whether before September 30 or afterwards, and who select refunds via paper check, there remains uncertainty as to whether this selection will be honored after September 30, 2025.
Payments
The announcement directs taxpayers to continue using existing payment options, including paper checks, until further notice. The IRS will release additional guidance and information for filing 2025 taxes prior to the 2026 filing season.
Additional Background
Modernizing Payments To and From America’s Bank Account
As discussed in GMS Flash Alert 2025-062, "US – Executive Order to Cease Paper Checks for Refunds," Executive Order 14247 mandates the Treasury to cease issuing paper checks for disbursements from the federal government, such as tax refunds, by September 30, 2025. Additionally, the order mandates that all payments made to the federal government, such as tax payments, be processed electronically “as soon as practicable, and to the extent permitted by law.” The executive order aims to transition all federal disbursements and receipts to digital formats, with certain exemptions. Exemptions are provided for individuals lacking banking access, emergency situations, and specific national security and law enforcement activities.
Request for Information Related to the Executive Order 14247, “Modernizing Payments To and From America’s Bank Account”
On May 30, 2025, the Treasury issued a request for information (RFI) seeking information and recommendations on matters related to the implementation of the executive order. KPMG’s Global Mobility Services functional group within its Washington National Tax practice responded to the RFI. KPMG’s response is available here.
FOOTNOTES:
1 IRS, IR-2025-94, Sept. 23, 2025, IRS to phase out paper tax refund checks starting with individual taxpayers | Internal Revenue Service
2 The White House, Executive Orders, March 25, 2025, Modernizing Payments To and From America's Bank Account – The White House
Contacts
Disclaimer
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained in this newsletter was submitted by the KPMG International member firm in the United States.
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