February 23, 2026

Modernizing Federal Tax Payments: What You Need to Know in 2026

Modernizing Federal Tax Payments: What You Need to Know

The IRS recently issues frequently asked questions in their Fact Sheet 2026-02 outlining key information about Executive Order 14247 signed in March 2025, which directs federal agencies to modernize how payments to and from the government are processed. This guidance is critical for taxpayers for the 2026 tax season and beyond.

Executive Order 14247 was created with the goal to strengthen the security, efficiency, and reliability of federal payments by moving away from paper checks and money orders toward electronic and digital methods.

This modernization effort applies to both refunds issued by the IRS and payments made by taxpayers.

For Refunds:

The change for refunds was put in effect as of September 30, 2025. Meaning that the IRS will no longer issue paper refund checks to taxpayers unless a hardship applies.

What does this mean if your return is filed without your bank account information? If direct deposit information is not provided and no hardship exception applies refunds could be delayed. Taxpayers will then receive a CP53E notice in the mail, using their last known address on record, requesting a response within 30 days, to either provide banking information or to explain why such information cannot be provided. This notice can be responded to either by mail or through the Taxpayer’s IRS Individual Online Account. The IRS will not take direct deposit information over the phone or in person.

Once the taxpayer provides the direct deposit information or exception, the refund will be immediately released. If there is no response to the notice and there are no other issues with the tax return, the refund will be released as a paper check after six weeks.

For Payments:

While Executive Order 14247 has only impacted refunds at this time, it does mandate that the IRS move to only accepting electronic payments as soon as practicable.

At this time, the IRS will continue to accept the same payment methods that it has in the past including checks, money orders, and various electronic payments.

While not mandated the IRS is strongly encouraging taxpayers to move to making payments electronically whenever possible to enhance the security of their payments.

As we move further into the 2026 tax season, Executive Order 14247 marks a significant shift in how taxpayers interact financially with the federal government. The transition to electronic refunds is already here, providing accurate direct deposit information is now more important than ever to avoid delays. While electronic payments are not yet mandatory, the IRS is clearly signaling the direction of future policy. Taking proactive steps now can help ensure smoother, faster, and more secure transactions in the years ahead. Modernization is here, and being prepared will put you one step ahead.

 

If you have any questions regarding this new change, please contact our team at Welgaard.