Impacts Tax Refunds and Payments, Effective September 30
By Ralf Ruedenburg, CPA Partner
President Trump recently signed an executive order, effective September 30, 2025, mandating the federal government to cease issuing paper checks for all disbursements, including tax refunds. From that date forward, tax refunds will only be processed electronically.
Similarly, tax payments to the federal government must also be processed electronically where permissible under existing law. The U.S. Secretary of the Treasury is tasked to deliver a detailed implementation plan within 180 days, along with any exceptions.
Our Initial Take
Non U.S. Groups Impacted
Because only U.S. bank accounts can be used when providing electronic direct-deposit and refund information on U.S. tax returns, there are mainly three non-U.S. groups that will likely be most impacted by the implementation of this policy:
- Companies with global mobility programs that send expatriates to the U.S. for limited periods.
- These companies generally collect refunds and make payments via check.
- Foreign individuals with investments in the U.S. (e.g., in partnerships).
- Foreign companies with taxable U.S. activities.
Members of these groups that do not have U.S. bank accounts must reconsider their processes to receive and make payments to the Internal Revenue Service (IRS), a bureau of the U.S. Treasury.
The Challenges
Besides the fact that opening a bank account in the U.S. can be a cumbersome process for non-U.S. groups, companies with global mobility programs that collect refunds or make payments on behalf of expatriates (expats) will face another challenge: it will not be possible to use one bank account for all expats. The IRS imposes a limit of three refunds deposited into one bank account.
Some Options
The IRS offers other payment options, such as debit/credit cards or digital wallets; these, however, come with additional fees. Another option is to use a foreign bank account for payments by completing a same-day-wire taxpayer worksheet. This carries an additional administrative burden for taxpayers working with a non-U.S. bank to complete the form and initiate payment — especially for companies with global mobility programs.
Action to Take Before September 30
Companies with global mobility programs, non-resident individuals and foreign entities with activities in the U.S. should review their processes now as they relate to U.S. tax refunds and payments. This proactive process review will help you prepare well in advance of the September 30 effective date when the federal government will cease to issue or accept paper check payments, unless an exception applies.
Note that, in most cases, this means that U.S. bank accounts will need to be opened.
Contact Us
The international tax team at PKF O’Connor Davies has the experience to guide you through this transition process and help establish best practices to comply with the new U.S. Treasury policy. As always, if you need any assistance, please reach out to your PKF O’Connor Davies client service team or: