The Internal Revenue Service is making transformative shifts in interactions with taxpayers. Now you can expect to receive your IRS tax refund via electronic deposit rather than a traditional paper check. Rest assured, your payment will still be delivered—just in a more secure and efficient manner. This change is part of a comprehensive modernization initiative by the Internal Revenue Service, designed to improve efficiency, enhance security, reduce fraud, and lower the substantial costs associated with paper-based transactions. Additionally, payments to the IRS are now required to be made electronically.

Below is an overview of the key aspects of this updated process to help you confidently navigate the new electronic payment landscape.

Key Dates and Requirements

• September 30, 2025: The IRS ceased issuing paper checks for tax refunds and other payments. All disbursements from the IRS are now being processed electronically with limited exceptions.
• As Soon as Possible: All payments to the federal government, including tax payments, must be processed electronically, where permitted by law.

Making Electronic Payments to the IRS

Taxpayers now have access to several secure electronic payment options:

• IRS Direct Pay: This free service allows individual taxpayers to pay directly from their checking or savings account. The platform is user-friendly and provides immediate confirmation of your payment.
• Electronic Federal Tax Payment System (EFTPS): EFTPS is available for all taxpayers, including businesses, trusts, and estates. Registration is required, and the process involves receiving a PIN by mail, which typically takes five to seven business days (though processing may take longer in some cases). We strongly recommend registering well in advance of any payment due dates.
• Electronic Funds Withdrawal: When filing your return electronically, you can authorize a direct debit from your bank account on a specific date, providing flexibility in timing your payment.
• Credit and Debit Cards: Third-party payment processors accept credit and debit card payments, though convenience fees typically apply.
• IRS Online Account: You can set up an online IRS account to manage payments securely, access tax information, and maintain better control over your tax obligations.

Receiving Electronic Refunds from the IRS

The transition to electronic refunds offers several advantages, including faster processing times and enhanced security. Here is what you need to know:

• Direct Deposit: The fastest and most secure method for receiving your refund is direct deposit into your checking or savings account. When filing your return, simply provide your bank's routing number and your account number. Double-check these numbers for accuracy to avoid delays.
• Prepaid Debit Cards: The IRS is working to provide alternative electronic payment options for taxpayers who do not have traditional bank accounts, including prepaid debit cards.

Important Considerations

• Be sure the name on your tax return matches the name on your bank account
• Direct deposit eliminates the risk of lost or stolen checks
• Refunds arrive significantly faster than paper checks
• You can track your refund status through the IRS "Where's My Refund?" tool or your IRS online account

Exceptions to the Electronic Payment Mandate

The Treasury Secretary has outlined several circumstances where exceptions may be granted:

• Individuals without access to banking services or electronic payment systems
• Emergency payments where electronic disbursement would cause undue hardship
• National security or law enforcement-related activities
• Other circumstances as determined by the Secretary of the Treasury

If you believe you qualify for an exception, we recommend contacting the IRS or consulting with our team for guidance. The Treasury Department is expected to issue detailed procedures for requesting exceptions.

Special Considerations for Trusts and Estates

Trustees and estate administrators should be aware of unique challenges:

• Payment Challenges: Currently, trusts and estates cannot use IRS Direct Pay. The two available options are wiring funds from a financial institution or using EFTPS. Given the PIN verification process for EFTPS enrollment, we strongly encourage immediate registration.
• Refund Challenges: The IRS requires matching names between tax returns and bank accounts for refunds. This presents difficulties when an estate receives a refund related to a decedent's final return. The American Institute of Certified Public Accountants (AICPA) has formally requested that the IRS exempt trusts and estates from these requirements until Form 1041 is updated to support electronic payment fields.
• International Considerations: Estates and trusts with overseas accounts may face additional complications as the mandate takes effect before complete rollout of ISO 20022 for cross-border payments.

Massachusetts Electronic Payment Options

While the new electronic payment rules apply only to federal payments, Massachusetts taxpayers benefit from robust electronic payment systems already in place through the Massachusetts Department of Revenue (DOR).

Making Payments to Massachusetts DOR

The Commonwealth offers three primary electronic payment methods through MassTaxConnect:

• EFT Debit (Preferred Method) This option allows the Massachusetts DOR to debit your bank account directly. There are no fees, and payments made before 11:59 p.m. on the due date are considered timely.
• Credit or Debit Card Payments Visa, MasterCard, Discover, and American Express are accepted. A third-party vendor convenience fee applies (2.35% for credit cards, 2.09% for debit cards).
• ACH Credit Businesses and individuals can instruct their bank to credit the Commonwealth's account directly. This requires specific formatting (CCD+TXP format) and coordination with your financial institution.

Receiving Refunds from Massachusetts DOR

• Direct Deposit When filing your Massachusetts tax return through MassTaxConnect or approved tax software, you can provide your bank account information for direct deposit. This is the fastest method, with refunds typically processing within four to six weeks for electronically filed returns.
• Paper Checks While the IRS is eliminating paper checks, Massachusetts continues to offer paper check refunds as an option, though direct deposit remains faster and more secure.

Key Points for Massachusetts Taxpayers

• E-filing combined with direct deposit results in the fastest refund processing
• You can check your refund status anytime through MassTaxConnect without creating an account
• Make sure your bank routing and account numbers are accurate to avoid delays
• Refunds may be subject to intercept for unpaid child support, back taxes, or other government debts

Accessing MassTaxConnect

MassTaxConnect is the Massachusetts DOR's comprehensive web-based platform for filing returns, making payments, checking refund status, and managing your tax accounts. You can:

• File personal income tax returns for free if you qualify
• Make estimated tax payments
• Set up payment plans for amounts owed
• Check the status of your refund
• Send secure messages to the DOR
• Manage business tax accounts

To use MassTaxConnect, simply visit the platform online. For most functions, you can access services without creating an account. However, registering for a MassTaxConnect account provides enhanced features and secure access to your complete tax information.

Best Practices for the Electronic Payment Era

We recommend the following steps to ensure a smooth transition:

1. Register for Electronic Payment Systems Now: Do not wait until a payment is due. Set up your IRS online account and enroll in EFTPS if applicable. For Massachusetts taxpayers, familiarize yourself with MassTaxConnect.
2. Verify Your Banking Information: Ensure your bank account and routing numbers are accurate on all tax returns. Even a single incorrect digit can cause significant delays.
3. Keep Detailed Records: Save confirmation numbers and receipts for all electronic transactions. These serve as proof of payment.
4. Plan Ahead for Trusts and Estates: If you serve as a trustee or estate administrator, begin EFTPS enrollment immediately due to the extended processing time for PIN delivery.
5. Update Your Information: If you change banks or close accounts, update your information with the IRS and state tax authorities promptly.
6. Consider Timing: Electronic payments can be scheduled in advance, providing better cash flow management for both estimated tax payments and final balances due.
7. Stay Informed: The Treasury Department will continue issuing guidance on implementation details and exceptions. We will keep you updated on any developments that may affect your tax situation.

Special Situations to Consider

• International Taxpayers: If you are subject to banking regulations that limit ACH deposits and withdrawals through the U.S., consult with our team to explore available options and potential exceptions.
• Unbanked Individuals: If you do not have access to traditional banking services, you may qualify for an exception or alternative electronic payment methods. The IRS is developing solutions for these situations.
• Large Payment Amounts: Wiring funds may be necessary for substantial tax payments, particularly for trusts and estates. Coordinate with your financial institution to ensure proper processing.
• Married Couples Filing Jointly: When providing bank information for direct deposit, use the Social Security number of the first spouse listed on the return to ensure proper posting of payments and refunds.

The transition to mandatory electronic payments represents a significant modernization of the federal tax system. While change can present challenges, the benefits include faster processing, enhanced security, reduced costs, and greater convenience for most taxpayers.

The Treasury Department is expected to release comprehensive implementation guidance before the 2026 filing season, addressing remaining questions about payment requirements, exception processes, and solutions for taxpayers facing unique circumstances.

How We Can Help

The electronic payment mandate is more than a procedural change; it is an opportunity to streamline your tax management and take advantage of modern, secure payment technologies. With proper planning and expert guidance, you can navigate this transition smoothly and efficiently.

Navigating these changes may seem daunting, but you do not have to manage it alone. Our team is here to:

• Review your current payment and refund processes
• Develop strategic plans for estimated tax payments
• Address unique challenges for trusts, estates, and businesses
• Ensure compliance with all federal and state requirements
• Provide ongoing updates as additional guidance becomes available

For personalized assistance with your specific tax situation, please contact Gray, Gray & Gray at 781.407.0300. We are committed to helping you adapt to these changes while maintaining effective strategic tax planning that serves your long-term financial goals.

This article is for informational purposes only and does not constitute legal or tax advice. Tax laws and regulations are subject to change. Please consult with a qualified tax professional regarding your specific circumstances.