The IRS and U.S. Treasury have begun to phase out paper tax refund checks, as directed by Executive Order 14247. The move to electronic refunds is designed to modernize the system, speed up payments, and reduce fraud. It also creates new hurdles for taxpayers without access to traditional banking.
Why the IRS Is Going Paperless
Electronic refunds are significantly safer, over 16 times less likely to be lost, stolen, or delayed. They’re also faster, often issued within 21 days when returns are filed electronically. For the government, electronic payments cut printing and mailing costs. In 2025, 93% of refunds were already delivered by direct deposit, thanks to taxpayers providing their bank information.
Impact on Unbanked Taxpayers
Roughly 7% of refund recipients still rely on paper checks. For these individuals, the shift may pose challenges. The American Bar Association has raised concerns that unbanked and underbanked taxpayers could struggle to adapt quickly. Prepaid debit cards, often suggested as an alternative, can carry higher fees and offer limited protections. The Tax Law Center has also noted that prepaid cards, typically used for monthly benefits, may not be ideal for annual tax refunds.
Available Alternatives
Several options can help taxpayers receive refunds electronically without a traditional bank account:
- Prepaid debit cards – Useful but may come with fees; replacement cards for future refunds may be required.
- Digital wallets – Platforms like PayPal and similar apps allow electronic deposits with minimal setup.
- BankOn-certified accounts – Low-cost, no-minimum-balance accounts designed for underserved communities.
- FDIC GetBanked resources – Taxpayers can visit the FDIC’s GetBanked website for guidance on opening a simple, affordable bank account.
- International taxpayers – Direct deposits to foreign banks aren’t allowed, so maintaining a U.S. account remains the recommended approach.
The IRS’s move to paperless refunds is both a forward-looking initiative and a logistical challenge, particularly for unbanked populations. The transition’s success hinges on making sure all taxpayers are adequately informed and have access to alternative financial services. By exploring and promoting viable solutions, taxpayers can mitigate potential disruptions in their refund process and embrace the efficiency of electronic payments.
This change will not affect taxpayer’s already receiving paperless refunds. Contact our office with questions.