AICPA recommends changes to mandate ending federal disbursements by paper check

Treasury should extend the time frame for mandating the end of paper checks for federal disbursements or at least set rules that make the transition easier for taxpayers, the AICPA said in a letter about Executive Order 14247, Modernizing Payments to and From America’s Bank Accounts.

The order requires the Treasury secretary to cease issuing paper checks for all federal disbursements and requires all payments made by the federal government to be electronically processed. It also requires that issuing paper checks for federal disbursements cease by Sept. 30 and that all federal receipts should be processed electronically as soon as practicable to the extent permitted by law.

While the AICPA supports the transition to electronic payments for federal disbursements and receipts, it believes challenges exist that will make it difficult to meet the Sept. 30 deadline without some changes.

“For many years, the AICPA has advocated for and supported the modernization of the IRS and its payment systems; although this executive order is a step in the right direction, there are many considerations before implementing changes, which means updated processes and carefully tailored rules will need to be developed,” Daniel Hauffe, J.D., AICPA senior manager–Tax Policy & Advocacy, said in a news release. “The AICPA’s recommendations allow for the modernization of the IRS’s tax payment systems while mitigating the impact of the administrative burden on taxpayers, tax practitioners, and the IRS that could be caused by this executive order.”

Mandating a U.S. bank account for electronic tax payments could exclude vulnerable taxpayers like seniors and the “unbanked” population. Also, international banking rules currently limit Automated Clearing House (ACH) transfers with non-U.S. financial institutions, the AICPA said.

The AICPA’s letter cited the Treasury Inspector General for Tax Administration’s (TIGTA’s) report on the 2024 filing season, which states that nearly 7 million taxpayers were issued refunds through a method other than electronic payment during the most recent tax year (see Final Results of the 2024 Filing Season, TIGTA Rep’t No. 2025-408-016 (April 24, 2025)).

The AICPA requested that Treasury consider the following recommendations:

• Implement exceptions to the order for individuals and business entities not physically present in the United States that do not have a U.S. bank account.

• Exempt temporary non-U.S. individuals — such as short-term business visitors — from electronic payment mandates, allowing them to receive tax refunds by paper check. The AICPA also recommends permitting individuals without a Social Security number or individual taxpayer identification number to make tax payments by check until their taxpayer identification is issued, helping them meet their obligations and avoid penalties.

• Expand Electronic Federal Tax Payment System (EFTPS) capabilities, which would enable business accounts to submit payments on behalf of individuals for Forms 1040, U.S. Individual Income Tax Return, and 1040-NR, U.S. Nonresident Alien Income Tax Return, including estimated tax payments, extension payments, and balances due. There should be no cap on the number of individual transactions a business account can process.

• Exempt all trust and estate income tax return filings from the requirements of the order until Form 1041, U.S. Income Tax Return for Estates and Trusts, has been updated with the appropriate information and that implementation of the order be delayed for trusts and estates until Treasury and the IRS can address certain issues concerning the administration of an estate or trust. The AICPA also recommends that Treasury and the IRS allow trusts and estates to pay via IRS Direct Pay rather than requiring them to set up an EFTPS account.

• Provide specific guidance regarding how exceptions will be applied for and granted to qualified taxpayers for whom this order would present an undue burden, including individuals over the age of 65 and taxpayers who are unable or unwilling to obtain U.S. bank accounts. The AICPA also recommends that taxpayers granted an exception have the option to receive tax refunds as a paper check or through a direct express card.

• Extend the time frame for implementation of the order or that, at a minimum, the Treasury secretary offers meaningful transitional rules when facilitating the transition of the federal disbursement and receipt system to being exclusively electronic.

• Consider seeking statutory authority for the mandates outlined in the executive order, which would provide a solid foundation for this transition to electronic payments.

• Convene a group of stakeholders, including the AICPA, to assist with the establishment of rules and processes for implementing the order.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.