What Modernized Payments Mean for Taxpayers and Businesses

In January 2026, the U.S. Department of the Treasury and the IRS released a Fact Sheet (FS-2026-02) answering frequently asked questions about Executive Order 14247: Modernizing Payments To and From America’s Bank Account. This initiative, signed on March 25, 2025, aims to move federal payments to fully electronic methods, improving efficiency, security, and speed while reducing errors and costs associated with paper checks and money orders.

At Velin & Associates, Inc., an Accounting Firm serving clients in Los Angeles and nationwide, we help individuals, businesses, and creators navigate these changes to ensure smooth, timely payments and refunds. Here’s what you need to know.

What Executive Order 14247 Means for Taxpayers

Electronic payments are becoming standard. Most federal refunds, benefit disbursements, grants, and other payments will now be delivered via direct deposit or other secure electronic options. Paper checks are being phased out, effective September 30, 2025, with limited exceptions for hardship cases.

Key Points for Individual Taxpayers:

• Filing your tax return itself does not change. The process for submitting Forms 1040, 1040-SR, or other tax filings remains the same.
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• Ensure your direct deposit information is accurate to receive refunds quickly.
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• Taxpayers without bank accounts can still receive payments through prepaid debit cards, mobile apps, or limited paper checks in special circumstances.
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• Electronic payments are faster and more secure than paper checks, minimizing the risk of loss or fraud.

Example: A freelance content creator with multiple income sources previously received paper refunds. By updating their banking information and choosing direct deposit for their 2025 return, we could ensure that their refund is processed promptly and securely—avoiding delays associated with mailed checks.

Payments Made to the IRS

The Executive Order also affects payments sent to the IRS, including:

• Tax balances due
• Fees for enrolled agents and tax practitioners
• Pre-filing agreements and advanced pricing agreements

Electronic options available now include:

• IRS Direct Pay from your bank account
• IRS Online Account for Individuals
• IRS Business Tax Account for businesses
• Debit/credit cards or digital wallets
• EFTPS (Electronic Federal Tax Payment System), which is being phased out for individual taxpayers in late 2026

Important: Paper checks and money orders are still accepted temporarily, but the IRS strongly encourages electronic payments whenever possible.

Example: A Shopify store owner client previously mailed quarterly tax payments by check. In that case, we could help them transition to IRS Direct Pay, ensuring timely electronic deposits and eliminating the risk of late penalties.

How Businesses Are Affected

Businesses that previously relied on mailed checks for refunds, payroll, or vendor payments will need to adapt to the electronic-first approach.

• Business refunds will now be issued primarily via direct deposit.
• Bulk payments, such as payroll taxes, trustee accounts, or fiduciary payments, will also transition to electronic methods.
• Some payments will still allow checks for hardship cases or legal requirements.

Example: An Amazon Business client used paper checks for refunds from multiple states and the federal government. By consolidating accounts and using electronic methods, we would reduce processing times, improve accuracy, and simplify accounting for the business.

International Taxpayers and Third-Party Stakeholders

International taxpayers will continue to receive refunds and make payments electronically through secure international partners and wire transfers.

Third-party stakeholders, including payroll providers, trustees, and tax professionals, are expected to adopt electronic payment methods for client transactions. The IRS provides resources, webinars, and guidance to help third parties comply.

Example: For filmmakers and creators working internationally, we could assist with setting up secure electronic payment channels, ensuring that international refunds and payments to the IRS are processed efficiently and in compliance with Executive Order 14247.

Preparing for Modernized Payments

To comply with Executive Order 14247, taxpayers and businesses should:

1. Verify banking information for direct deposits and electronic payments.
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2. Open a low- or no-cost bank account if one is not available. Resources include FDIC GetBanked and MyCreditUnion.gov.
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3. Use electronic payment options for IRS transactions whenever possible.
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4. Stay informed about updates for exceptions, alternative payment methods, and technical requirements.

Why Professional Guidance Matters

The transition to electronic payments introduces new considerations for:

• Online businesses (Shopify, Amazon)
• Creators (YouTubers, TikTokers, Filmmakers)
• Healthcare professionals (Doctors, Dentists)
• High net worth individuals, Business owners

Working with a CPA ensures compliance, avoids penalties, and helps streamline transactions in alignment with the IRS and Treasury Department requirements.

At Velin & Associates, Inc., we provide:

• Tax preparation and planning
• Bookkeeping and tax services
• Guidance for electronic payment compliance
• Support for international and multi-state businesses

For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org

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