Trump’s Executive Order Requiring Electronic Tax Payments and Refunds: What Does It Mean?

On March 25, 2025, President Trump issued Executive Order 14247, “Modernizing Payments to and from America’s Bank Account” (“Order”). Effective Sept. 30, 2025, the Order requires the U.S. Treasury, to the extent permitted by law, to cease issuing paper checks for all government payments, which include tax refunds, but with certain exceptions. Also, “as soon as practicable, and to the extent permitted by law, all payments made to the Federal Government (which include tax payments and deposits)” are required to be processed electronically, but again, with certain exceptions.

Executive Order 14247 directs Treasury to grant limited exceptions from the electronic payment and receipt requirements for:

• Individuals who do not have access to banking services or electronic payment systems
• Emergency payments where electronic disbursement would cause undue hardship
• National security or law-enforcement related activities where non-EFT transactions are necessary or desirable
• “Other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance”

The potential effects on income tax payments and refunds include:

Tax Payments

Section 6302 currently grants Treasury the authority to implement regulations concerning “the mode or time for collecting any tax” which is otherwise not provided for in the code. Presumably, Treasury will be able to propose and finalize regulations that require most individuals and businesses who are not already required to make electronic payments to do so, although perhaps subject to any implications of Loper Bright v. Raimondo (603 U.S. 369, 144 S. Ct. 2244, 6/28/2024) and its potential effects on agency rulemaking authority.

Consequently, we may see Treasury issue proposed regulations in the next several months that require virtually all tax payments to be made via electronic means, with limited exceptions, coupled with penalties for noncompliance.

Tax Refunds

The majority of electronic and paper tax return filings enable taxpayers to provide bank account information to the IRS, which results in them receiving their refunds through direct deposit, which is much faster than by paper check. Through May 9, 2025, the IRS had issued nearly 93.6 million tax refunds for the 2025 filing season, of which 86.9 million were made via electronic means.

Although well over 90% of tax refunds are made via electronic means, many individuals do not have bank accounts or are otherwise uncomfortable with providing the IRS and others (tax preparation software and service providers, etc.)  with their banking information for purposes of receiving refunds or making tax payments. While the tax code allows Treasury to implement regulations regarding the methods of collecting taxes, it is silent on required methods of paying out refunds. This raises the question of whether the IRS can require taxpayers to provide their banking information for purposes of paying refunds if Congress has not authorized them to do so?

Required Guidance is Forthcoming

Under the Order, a written implementation plan is required to be submitted by the Treasury no later than Sept. 20, 2025. The Treasury and other branches of the federal government are also directed to implement a comprehensive public awareness campaign to inform federal payment recipients of the transition to electronic payments, including guidance on accessing and setting up digital payment options.

Presumably, the forthcoming implementation plan from the Treasury Department will shed significant light on how the IRS plans on implementing the Order over the next several months for purposes of electronically paying out refunds in addition to collecting taxes.

For more information about EFT requirements for tax payments and refunds, please contact your tax professionals.