It Seems People Are Still Confused About How to Handle Our First Tax Season Without Checks
•January 29, 2026
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Why It Matters
The shift accelerates nationwide digital payment adoption, cutting costs and fraud while reshaping tax refund processes for individuals and businesses.
Key Takeaways
- •Executive order bans federal checks by Sep 30 2025
- •IRS released FS‑2026‑02 guidance to clarify electronic payments
- •Taxpayers must adopt direct deposit or electronic refunds
- •Unbanked individuals face new challenges accessing refunds
- •Government expects $657 million annual savings from digitization
Pulse Analysis
The March 2025 executive order represents a decisive federal push toward a fully electronic payments ecosystem. By targeting the $657 million annual overhead tied to check processing and highlighting the heightened risk of mail theft, the administration framed the move as both a cost‑saving and security imperative. This policy aligns with broader digital‑first strategies across government agencies, signaling that legacy paper instruments are no longer acceptable for public finance operations.
In response, the IRS’s FS‑2026‑02 bulletin offers practical steps for taxpayers, businesses, and third‑party vendors. It outlines mandatory use of direct deposit for refunds, electronic funds transfer for tax payments, and alternative methods for the unbanked, such as prepaid debit cards linked to government portals. Tax preparers are urged to update software workflows, while vendors must revise invoicing procedures to accept ACH or RTP transactions. The guidance aims to smooth the transition, yet many filers still report uncertainty, underscoring the need for targeted outreach and education.
Beyond immediate compliance, the check‑free mandate foreshadows a broader transformation of the U.S. payments landscape. Financial institutions are expected to expand digital onboarding services, and fintech firms may see heightened demand for low‑cost, secure electronic payment solutions. For businesses, the shift promises faster cash cycles and reduced reconciliation errors, while consumers could benefit from quicker refund delivery. As the deadline approaches, stakeholders that proactively adopt electronic payment infrastructure will gain a competitive edge and contribute to the government’s goal of a more efficient, fraud‑resistant fiscal system.
It Seems People Are Still Confused About How to Handle Our First Tax Season Without Checks
Last March, President Trump issued the Modernizing Payments To and From America’s Bank Account executive order which ordered — nay, demanded — the end of paper checks as a form of payment both into and out of the entity described as “America’s bank account.” In simpler words, the government would no longer accept checks from taxpayers nor would they issue checks to them and everyone had six months to figure it out.
The order reads:
The continued use of paper-based payments by the Federal Government, including checks and money orders, flowing into and out of the United States General Fund, which might be thought of as America’s bank account, imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies. Mail theft complaints have increased substantially since the COVID-19 pandemic. Historically, Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer (EFT). Maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American taxpayer over $657 million in Fiscal Year 2024 alone.
This order promotes operational efficiency by mandating the transition to electronic payments for all Federal disbursements and receipts by digitizing payments to the extent permissible under applicable law (but not, for avoidance of doubt, to establish a Central Bank Digital Currency).
You’ve got to love when official government orders include a shout-out to widespread internet conspiracies.
The timing of the order — March 25 — led many people including well-informed tax practitioners to assume this was some kind of April Fool’s joke. See: Trump Ends the Tax Refund Check (note we purposely chose to publish that article on April 2nd to not add further confusion). The effective date of September 30, 2025 also caused a bit of panic as that gave just six months from the time the order was issued to the time it was expected to be fully in effect.
Now four months past the date on which checks were supposed to disappear forever, the IRS has issued quite a bit of guidance to help those who are still confused by how all of this works. We’ve included the entirety of FS-2026-02 below for your reading pleasure.
There’s a little something for everyone in here: taxpayers, businesses, vendors, interested third parties, the unbanked, tax preparers…
Have fun!
The post It Seems People Are Still Confused About How to Handle Our First Tax Season Without Checks appeared first on Going Concern.
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