Whitley Penn Tax Alert: IRS Requires Electronic Tax Payments and Refunds
January 26, 2026
Beginning today, the IRS will open the 2026 filing season and start accepting 2025 federal income tax returns. A key change for 2025 and future filings is a mandate that nearly all federal tax payments and refunds be made electronically. The shift to electronic payments is being implemented to improve efficiency, reduce government costs, and limit fraud and theft.
In accordance with a March 2025 Executive Order issued by President Trump (Executive Order 14247 – “Modernizing Payments To and From America’s Bank Account”), the IRS began phasing out the issuance of paper refund checks on October 1, 2025. Beginning with filings for the 2025 tax year, taxpayers should include banking information with their federal tax returns to facilitate a refund using direct deposit or electronic funds transfer. If the information is not included with a taxpayer’s return, the IRS will contact the taxpayer via the U.S. mail to request the information. The IRS will not issue a refund check during this process and the taxpayer’s receipt of the refund will be delayed several weeks.
The Executive Order also requires taxpayers to make all tax payments electronically, including estimated tax payments. IRS guidance on the implementation of this requirement is pending, but taxpayers should begin making electronic tax payments as soon as possible in anticipation of the issuance of that guidance. Once the payment processes are clarified and implemented, failure to comply with the electronic payment requirement may result in the assessment of penalties.
Several accepted methods to remit federal tax payments are available including:
- IRS Direct Pay – This method may be used by individuals to pay estimated tax payments, balances due with Form 1040, extension payments with Form 4868, and balances due with amended returns filed on Form 1040-X. Direct Pay is also available for certain businesses including corporations, partnerships, and private foundations. No advance registration is required to use Direct Pay.
- IRS Online Account – Taxpayers may establish an online account with the IRS. Taxpayers can use their online account to schedule future payments, check refund status, view tax return data, and view copies of IRS notices.
- Electronic Federal Tax Payment System (“EFTPS”) – EFTPS may be used to make payments for businesses, trusts, and estates. According to the IRS, current EFTPS users may continue to use EFTPS to transmit payments. Taxpayers without an existing EFTPS account must enroll in the program in advance before they may begin making payments. Individual taxpayers can no longer create new EFTPS accounts and are directed to use IRS Direct Pay.
- Other Methods – Other remittance methods may be available to taxpayers including debit or credit cards (subject to charges and fees), ACH transfers, digital wallets, and prepaid cards, subject to available IRS support.
Certain taxpayers may qualify for limited exceptions to the electronic payment requirement including, but not limited to, individuals without access to banking services or electronic payment systems, taxpayers over age 65, international taxpayers, and U.S. citizens living abroad. The IRS will issue further guidance regarding a taxpayer’s qualification and the processes required for claiming an exception.
Unless an exception applies, taxpayers should begin implementing the electronic payment processes immediately to ensure the timely and efficient receipt of income tax refunds and compliance with the electronic payment requirement in advance of the final IRS guidance, which may be issued at any time.
Information regarding remitting electronic tax payments is located on the IRS website at https://www.irs.gov/payments.
Disclaimer: This tax alert is designed only to provide general information regarding its subject matter and should not be construed as tax, accounting, or legal advice to any specific person or entity. The statutes, authority, or other law discussed or cited in the alert are subject to change and Whitley Penn assumes no obligation to update the reader of any changes. Any advice or opinion regarding the application of the subject matter for a specific person or entity should be provided by a competent professional tax advisor based on the application of the appropriate law and authority to the facts and circumstances applicable to that person or entity.
Whitley Penn is continually monitoring tax and economic developments and will send out additional alerts in the future. In the interim, please contact your Whitley Penn tax advisor if you have any questions or require any additional information.