• Unresolved Policies– Key decisions remain pending, including whether Treasury-issued prepaid cards will be automatic or require taxpayer opt-in. 
• Hardship Exceptions– IRS is still crafting rules for individuals lacking banking access and how they can apply for exceptions.  
• Scope of Impact– This mandate extends beyond individual refunds to include business, trust/estate, and employment tax refunds.
• Timeline Concerns–one former IRS official had suggested full adoption by 9/30 is unlikely, with only an initial implementation framework expected by the deadline.   

What this means for practitioners 

• We may see incremental rollouts instead of a hard switch on September 30. 
• Begin preparing clients for eventual digital refund requirements.
• Watch closely for IRS guidance on exceptions, opt-in procedures, and updated tax form designs.   

The policy direction is unmistakable—even if the timeline proves aspirational. Just as with e-filing mandates, digital will soon be the default.   

---

President Trump signs executive order 14247

In March of 2025, President Trump signed an executive order requiring the federal government to transition from paper checks to electronic payments for all payments and disbursements by September 30, 2025. This mandate, which includes federal tax return refunds and payments, marks a transformative moment for the U.S. tax administration system (read about the executive order in my recent article).

The transition to electronic payments has broad implications for the tax preparation industry and will likely be challenging. With a transition deadline of September 30, 2025, tax professionals must maintain current operations while overhauling intake processes, upgrading technology, and educating clients.

While other articles delve into the executive order’s overall implications, this article focuses on how the order impacts you, the professional tax return preparer, and your clients, covering topics such as:

• The implications of federal payments and disbursements “going paperless” for tax preparers like you.
• The impact of shifting to electronic disbursements on your clients, especially the unbanked population in the U.S.
• The operational, compliance, and client-education-focused changes tax preparers and offices must consider during the government’s transition to electronic-only.
• The payment options that professional tax preparers can offer clients after the federal government finishes transitioning to electronic payments on September 30, 2025.

What does executive order 14247 mean for tax preparers?

The entire tax preparation industry will feel the impacts of the federal government’s mandate to shift to paperless payments and disbursements. However, a particular subset will experience an outsized impact: Electronic Return Originators (EROs) and tax professionals primarily handling Form 1040 individual tax returns.

This diverse segment of the market encompasses tax professionals of all types, from sole proprietors and seasonal preparers to enrolled agents and high-volume commercial retail offices. While most are not CPAs, and many only serve clients during tax season, they collectively process millions of returns each year and serve as a critical bridge between the IRS and the American public.

Editor’s note: The IRS defines an ERO as “the authorized IRS e-file provider who originates the electronic submission of a return to the IRS. The ERO is usually the first point of contact for most taxpayers filing a return using IRS e-file.”

What is the potential impact of electronically processing tax return payments and disbursements on the unbanked?

Simply put, the executive order’s mandate to eliminate paper checks for tax refunds (among other things) directly affects the approximately 5.9 million individuals who receive tax refunds via paper check and an estimated 4.2% of the population, or 5.6 million individuals who don’t have a checking, savings, or money market account (the “unbanked,” according to the FDIC).

The transition to electronic payments poses particular challenges for the unbanked, who are disproportionately found in minority communities. While only 4.2% of adults nationwide are unbanked, 12.2% of American Indian/Alaska Native, 10.6% of Black, and 9.5% of Hispanic households are unbanked (FDIC National Unbanked Survey).

These individuals could easily suffer from refund delays or exclusion from the system as they struggle to navigate complex exception processes or resort to costly alternative financial services.

What changes will professional tax preparers need to consider as they prepare for the federal government going paperless?

Operational changes: Overhauling client intake and technology systems

To support the executive order, your tax office’s client intake processes will have to change. Each client’s preferred refund disbursement type and exception documentation must be collected, increasing data security risks.

Your professional tax preparation software and client management systems must be able to securely collect, store, and transmit electronic payment information in compliance with IRS and Treasury requirements. At a minimum, your current tech stack should:

• Integrate with IRS e-file systems.
• Support direct deposit, prepaid debit card, and digital wallet options.
• Maintain cybersecurity protocols to protect sensitive client data.

Changes like this can be daunting for many tax professionals and offices of all sizes due to sticker shock and the challenges of system-wide changes, but they don’t have to be. Consider this an opportunity to revisit processes, fix what isn’t working, and find something better for your office and clients.

Historically, sole proprietors, seasonal tax preparers, and smaller offices are more likely to struggle with limited administrative support and serving clients who are less technology-savvy or who may be more resistant to change.

Tax offices facing these types of difficulties should consider the following:

• Adding client refund selection and verification steps to your intake workflows, scripts, and procedures.
• Proactive client communication – leveraging IRS and Treasury resources for client education – to ensure clients are informed and prepared for the transition.
• Offering alternatives for unbanked clients, such as prepaid debit cards or paper checks via refund transfer products, if you’re not already doing so.
• Upgrading existing (or investing in new) technology that offers upgraded data privacy and security protocols and mobile-friendly portals for clients to select their preferred refund method.
• Training yourself and staff on the new rules and how to assist with setting up digital payment options.

Depending on size, high-volume commercial offices can process millions of returns annually and serve a diverse clientele, including many unbanked and underbanked individuals. Historically, their size has acted as a double-edged sword; while they have administrative support, these offices can lack flexibility. Changes must be rolled out across extensive workflows and systems, potentially requiring technology upgrades and additional staff training.

If you’re struggling with similar issues, strategies to be successful might include:

• Training staff to screen for unbanked clients and guide them toward compliant refund options.
• Creating multiple client education campaigns on the new rules, each targeting a different target client type.
• Developing partnerships with financial institutions and fintech to support direct deposit, prepaid debit card, and digital wallet options.
• Maintaining a robust disbursement preference and exception management database.

Compliance challenges: Navigating exceptions and documentation

Form 1040-focused tax preparers must identify clients who qualify for exceptions to the electronic payment mandate (read more about who qualifies for exceptions).

Proper documentation is essential to protect clients and ensure tax preparers remain in good standing with the IRS.

Sole proprietors, seasonal preparers, and smaller offices need streamlined and optimized processes. Dedicated administrative staff may be unavailable, which means documentation may not be complete and correct if processes are cumbersome or complicated.

Meanwhile, high-volume commercial offices need systems that can handle the increased volume and complexity of tracking refund preferences and exception cases.

Client education: Bridging the knowledge gap

Getting clients comfortable with electronic payments requires serious effort. Many people who don’t have bank accounts or only use basic banking services have never dealt with direct deposits, card payments, digital wallets, or instant transfers before. Tax preparers must now teach these clients how these systems work and why they’re worth using.

Many unbanked or underbanked clients may be unfamiliar with electronic payment options. It will be up to tax return preparers to explain the benefits and mechanics of direct deposits, debit and credit card payments, digital wallets, real-time payment systems, and Treasury-approved alternatives, such as prepaid debit cards.

Sole proprietors, seasonal preparers, and smaller offices may encounter significant capacity issues. While they are less likely to deal with large-scale staff training concerns, they may not have the staff or budget to develop educational materials or spend extra time with each client.

While high-volume commercial offices can more efficiently produce educational materials, their size is a double-edged sword. The material must be effective for a diverse group of individuals and clear to staff who may not understand the changes.

The bottom line is that tax preparers, whether running a single-person shop or a large operation, are in the position of teacher, hand-holder, and tax expert, significantly increasing their workload.

What tax return disbursement options can tax professionals offer clients after September 30, 2025?

Direct deposit / ACH withdrawal

Most clients will choose direct deposit into (or withdrawal from) checking and/or savings accounts for their tax return refunds/payments. However, for the 4.2% of adults in the U.S. who are unbanked, and those who mistrust electronic payments and have previously chosen paper checks, using a bank account for tax return payments and refunds will be a new experience.

As part of your client education program, consider making clients aware of programs like the FDIC’s Money Smart and the Veterans Benefits Banking Program. Integrating financial education and counseling resources into client education and intake forms can help overcome electronic payment distrust. Lastly, consider partnering with local banks and credit unions to help clients open low-cost or no-fee accounts.

Prepaid debit cards

The Treasury and IRS have identified prepaid debit cards as a key solution for unbanked clients. The Federal Government uses the Direct Express™ prepaid debit card as the bank or credit union account alternative for federal benefit payments (such as Social Security, SSI, and Veterans). The Direct Express card may be the federal government’s tax refund solution for those without access to – or the willingness to open – bank or credit union accounts. However, no solution has been announced as of this article’s publication date.

That doesn’t leave tax preparers without options. Tools on the market today – refund transfer products – allow tax professionals to disburse the client’s refund via prepaid card if that’s the option chosen. even allow the professional tax preparer to deduct preparation fees directly from the client’s refund.

Digital wallet / nonbank online payment services

For professional tax preparers with a significant client base used to receiving paper checks, being able to transfer their tax refund to nonbank online payment services such as PayPal, Venmo, and CashApp is a competitive advantage. According to the FDIC’s most recent National Unbanked Survey, almost a third of unbanked individuals in the U.S. rely on nonbank online payment services and prepaid cards for daily transactions, with nonbank online payment usage increasing compared to reloadable and prepaid cards.

Many of the same tools on the market today that allow tax professionals to disburse the client’s refund via prepaid cards also support nonbank online payment services. Bank products provide a seamless, electronic alternative to paper checks.

Paper checks

Some clients will never accept anything other than a paper check, and keeping these clients means being able to offer that option, even if the federal government no longer does. There are options on the market today for tax professionals with these clients. Many of the same refund transfer solutions that support reloadable prepaid cards and nonbank online payment services also enable tax preparers to print paper checks for these clients.

Best practices and technology solutions for transitioning to electronic payments

Best practices include:

Support clients with limited digital literacy or access to technology to ensure equitable access to electronic payments. Mobile-friendly tools and apps like IRS2Go can help bridge the digital divide and make electronic payments more accessible.

For clients with disabilities or limited English proficiency, preparers should utilize IRS resources such as accessibility helplines, alternative media formats, and multilingual support.

Make sure you have the tech and tools you need

Your tax preparation software’s features and functionality will support the transition to electronic payments. When considering tech tools, assess your current tech stack to ensure it will serve your needs while providing the necessary data privacy and security.

Non-negotiable functionalities for your tax preparation software:

• Integration with alternate payment options such as refund transfer products and nonbank online payment services like PayPal, Venmo, and CashApp.
• Secure client intake forms and organizers. While these could be fillable PDFs, digital forms integrated with your tax software improve efficiency.
• Data security provisions such as multi-factor authentication, 256-bit SSL encryption to secure data transmission and storage, and robust password guidelines.
• E-File for federal and state returns, with return (and refund) tracking reports/dashboards.
• E-Signature tools that are compliant with IRS standards.
• Payment processing with tax-specific tools, including ACH or credit/debit card payment options, auto-billing features, and integration with invoicing tools or a client management system.

Preparers and offices concerned with upfront investment should consider a cloud-based tax preparation software that offers a pay-per-return model. These software options tend to be affordable and allow users to handle electronic payments and processing without significant upfront investment.

High-volume and multi-location tax offices concerned with efficiency will benefit most from tax preparation solutions that offer advanced workflow management, batch processing, and integrations with external tools such as a client portal/client management system, enabling efficient handling of large client volumes.

Modernizing payments offers tax professionals significant opportunities

The executive order presents both challenges and opportunities for tax professionals to enhance their services and differentiate themselves in the market:

Value-Added Services

• Offer “digital refund readiness” consultations to help clients transition to electronic payments.
• Assist with setting up direct deposit or prepaid debit card accounts

New Revenue Streams

• Charge fees for additional services, such as educating clients about digital payment options or managing exception documentation.

Market Differentiation

• Position your tax business as a leader providing client education and support during this transition. 

Conclusion

The challenges are substantial, encompassing client base impacts, operational changes, client education, compliance, technology adaptation, and the equitable treatment of unbanked and minority clients. Preparers must evaluate the needs of unbanked and minority populations, revise their intake and technology systems, educate clients about new payment options, manage changing compliance requirements, and adapt how they do business. The transition will require time, resources, and expertise. Still, it also offers the potential for tax professionals to enhance their value and deepen client relationships.

https://www.wolterskluwer.com/en/expert-insights/modernizing-payments-the-shift-from-paper-checks-to-digital