It is now official. The U.S. federal government will require nearly all payments to and from federal agencies—including the IRS and Social Security Administration—to be made electronically. Essentially, refunds are being moved to e-refunds for the coming tax season and in the next two years, the IRS is anticipated to phase out accepting payments via check.

The IRS provides several electronic payment options for freelance businesses.

To prepare for this change in your freelance business, it is important to familiarize yourself with electronic payment methods including IRS Direct Pay, which allows free payments from your bank account, and the Electronic Federal Tax Payment System (EFTPS). The EFTPS is available to both individuals and businesses. You can also use the IRS2Go mobile app, debit or credit cards through approved third-party processors (note that fees may apply), or Electronic Funds Withdrawal (EFW) when filing your taxes electronically.

However, for the 2025 tax year (filed in 2026), no paper checks will be issued for refunds. You must provide your bank account information for direct deposit to avoid delays in receiving their refunds. If no direct deposit information is provided and an exception is not approved, the IRS will hold the refund for six weeks before issuing a paper check.

It is anticipated that paper checks will no longer be accepted for payments by 2027. For freelancers, this shift is more than a policy update—it’s a call to action to modernize how you manage your money and stay compliant.

This change is part of a broader federal initiative to reduce administrative costs, improve security, and eliminate delays associated with paper-based transactions. 

Social Security is also subject to mandatory electronic payment regulations.

If you receive Social Security benefits, you’ll need to transition to one of two electronic options. The first is direct deposit, which sends payments straight to your checking or savings account. You can manage this through your Social Security account online. The second option is the Direct Express® card—a prepaid debit card designed for individuals who don’t have a bank account. To enroll, visit www.usdirectexpress.com or call 1-800-333-1795. 

To stay compliant and avoid non-payment or late payment penalties, as well as disruptions to your cash flow, take action now. Update your direct deposit information with both the SSA and IRS. If you don’t have a bank account, consider enrolling in Direct Express®. 

Prepare to pay and receive payments electronically going forward.

The bottom line is that you need to be prepared to pay and receive transactions electronically if you owe taxes. The Executive Order requires all payments to the federal government to be made electronically "as soon as practicable." The IRS has indicated that updates on how payments will be handled are anticipated starting in 2027. 

If you have questions about how this change affects your freelance business or need help with planning for estimated tax payments, reach out to a trusted tax advisor. Preparing now will help ensure a smooth transition to the mandated IRS and Social Security electronic payments without any fines, penalties, or disruptions to your freelance income flow.