An Executive Order was signed on March 25, 2025, mandating that the Federal government will cease issuing or receiving money via paper checks by September 30, 2025.  This directive is part of a broader paper check phase out that is expected to impact various financial interactions, including tax refunds and payments, Social Security benefits, and payments to vendors with governmental contracts. The transition to electronic payments is intended to combat fraud, increase efficiency, reduce costs associated with paper check processing, and modernize the federal government’s operations.

For those who prefer not to receive direct deposits, the government will offer Treasury-approved alternatives such as prepaid debit cards.  For tax payments, the Treasury urges taxpayers to utilize IRS Direct Pay or Electronic Federal Tax Payment System (“EFTPS”).

Exceptions to the Rule

The executive order does provide for certain exceptions where paper checks may still be used, including:

  • Individuals without access to banking services or electronic payment systems,
  • Certain emergency payments where electronic disbursement would cause undue hardship,
  • National security- or law enforcement-related activities where non-EFT transactions are necessary or desirable, and

Other circumstances as determined by the Secretary of the Treasury

Potential Penalties and Delays

While the Executive Order outlines the paper check phase out, it does not specify any penalties or delays for those who qualify for paper check exceptions.   However, it remains to be seen if any measures will be introduced to discourage the use, both receipt and issuance, of paper checks.

Preparing for Required Electronic Payments

As the September 30, 2025 deadline for the paper check phase out approaches, it will be crucial for individuals and organizations affected by this change to explore and transition to the available electronic payment options, such as direct deposit, IRS Direct Pay, and EFTPS.

A benefit of EFPTS is you can schedule payments in advance and monitor payments as they process.  The EFTPS enrollment process takes 2-3 weeks, so we strongly encourage our clients to enroll as soon as possible.  For EFTPS enrollment, apply online (https://www.eftps.gov/eftps/).  Once you submit the enrollment application, you will receive a PIN in the U.S. mail to complete your registration.  Please keep this PIN in a safe place as you will need it for your EFTPS account going forward.  You can use the EFTPS website or the voice response system (1-800-555-3453) interchangeably to make payments.

If you want to make singular payments, you can always do so with IRS Direct Pay (https://www.irs.gov/payments).

If you anticipate receiving a Federal tax refund, please contact your Maxwell Locke & Ritter contact to provide your banking information and ensure you are set up for direct deposit. Should you have any questions about electronic payment methods or need assistance with enrollment, your ML&R team is here to help.