Electronic payment requirement will not affect 2024 tax returns

There will soon be a big change for some taxpayers in how they send tax payments to the federal government or receive refunds.

Executive Order 14247, Modernizing Payments to and from America’s Bank Account, is intended to modernize financial operations, reduce costs, minimize fraud, and eliminate inefficiencies associated with paper-based transactions. One of the drivers of this Order is the fact that processing paper checks reportedly cost the government over $657 million in fiscal year 2024.

Under the order, tax payments, including Federal estimated taxes, will need to be made electronically, now beginning in 2026, rather than 2025 as originally scheduled. In addition, Federal tax refunds will no longer be issued as paper checks and must be received via direct deposit or another electronic method.

Note that there is NO change required for 2024 tax returns being filed that show balances due or for 2025 estimates to be paid.

In a press release, the IRS stated it “will publish detailed guidance for 2025 tax returns before the 2026 filing season begins. Until further notice, taxpayers should continue using existing forms and procedures, including those filing their 2024 returns on extension of a due date prior to Dec. 31, 2025.

However, taxpayers should anticipate 2025 balances due, extension, and 2026 estimates to be paid using a digital option.

The IRS provides several electronic payment options that can be used to comply with the new mandate:

• IRS Direct Pay – This free service allows you to pay your taxes directly from your checking or savings account. 
• Electronic Federal Tax Payment System (EFTPS) – A free, secure service from the U.S. Treasury is available for both individual and business taxpayers. 
• IRS Online Account – Through your online account, you can manage and make payments
• Debit/Credit Card or Digital Wallet – Payment can be made via a third-party processor online, by phone or through the IRS2Go app. Convenience fees may apply.
• Electronic Funds Withdrawal – When e-filing through tax software or a tax professional, you can directly withdraw the payment from your bank account. Please note that this option will continue be available with the filing of your 2025 annual tax return.

There are a few exceptions to this order:

• Individuals without access to banking or digital payment services.
• Those in emergency situations.
• Individuals who qualify under other legal exemptions, as determined by the Treasury Secretary.

To prepare for the new electronic payment requirement, taxpayers should take the following steps:

• Set up an IRS online account or EFTPS account. In setting up an account, it will allow you to view your tax balance, schedule and manage payments and access other information.
• Verify your bank information. Ensure your bank account and routing number are up to date for electronic tax payments and receipt of tax refund deposits.

Many of our clients already have electronic payment accounts set up with the Federal government, as well as with the State of Ohio and the Regional Income Tax Agency.

We recommend that all taxpayers consider setting up an electronic account with the State of Ohio and with the Regional Income Tax Agency, if applicable.

Utilizing these services is a safe, secure, and efficient way to manage payment of your tax liabilities. If you have questions regarding electronic payment options, feel free to contact a member of your Client Service Team.