Some taxpayers may experience delays in receiving their tax refunds due to a new directive from the Internal Revenue Service (IRS) that aims to modernize the way the government handles financial transactions. As a result of President Donald Trump’s March 2025 executive order, many taxpayers may have to wait weeks for their refunds if they opt to receive paper checks instead of direct deposits.
What happened:
The executive order titled “Modernizing America’s Bank Account Payments” was signed into law in March 2025 and took effect in September of that year. The directive states that the US Treasury Department will stop sending and accepting paper checks for all federal financial transactions, including tax refunds.
The IRS now strongly encourages taxpayers to select direct deposit for their refunds, which can typically be expected within 21 days of the agency accepting their tax return. However, those who choose paper checks will have to wait much longer, with refunds potentially delayed by up to six weeks.
The new system also introduces a potential complication for taxpayers who make mistakes when entering their bank account details. If there is an error in the bank account information provided, the IRS will withhold the refund until the correct details are submitted. Affected taxpayers will have 30 days to contact the IRS and either provide the correct bank information or request a paper check. If the fault is not resolved after 30 days, the refund will be issued via paper check, resulting in a delay of up to six weeks.
Why is this happening:
The “Modernize Payments” initiative is part of an effort to streamline financial processes and reduce inefficiencies in federal payments. According to the White House, continued reliance on paper-based payments like checks and money orders is costly and prone to issues like fraud, theft and delays. In fact, paper checks are 16 times more likely to be reported lost, stolen, altered, or undelivered than electronic transfers, which are more secure and efficient.
The transition to a paperless system is also expected to save taxpayers money, with the White House estimating that digitizing paper records will cost the US government more than $657 million in fiscal year 2024 alone.
Public reactions and potential impacts:
While the move to modernize the payment process has been praised for its ability to reduce costs and improve efficiency, it has raised concerns among some taxpayers. For people who are accustomed to receiving paper checks or who don’t have direct deposit setup, delays in receiving a refund can cause financial stress. Taxpayers who make mistakes in their bank statements may face additional frustration as they move to the new system.
looking ahead:
The IRS is working to make sure the transition to the paperless system goes as smoothly as possible, and taxpayers are urged to double-check their bank account information when filing their taxes to avoid delays. While switching to electronic payments is expected to provide long-term benefits in terms of efficiency and security, the immediate impact of these changes may be felt by many taxpayers during the 2026 filing season.
As the federal government continues to modernize its payment systems, taxpayers will need to stay informed about these new processes and adjust accordingly to avoid unnecessary delays in receiving their tax refunds.