What tax pros should know

As you prepare for the upcoming tax season, a notable change is taking effect that will impact how your clients receive their tax refunds. Effective September 30, 2025, the IRS is phasing out paper tax refund checks for individual taxpayers as part of a broader government transition to electronic payments.

While 93% of taxpayers already receive refunds via direct deposit, this change requires proactive planning – especially for communicating with the 7% of clients who still rely on paper checks.

This blog will help you understand the implications for your practice, the updates in Thomson Reuters UltraTax CS software, and the action steps you need to take now to ensure a smooth filing season.

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Understanding the change with paper check tax refunds

Why this change benefits your clients

The scope: Understanding the numbers on tax refunds

What’s changed in UltraTax CS

Action steps for tax professionals for tax season

What about payments to the IRS?

Looking ahead: Future updates on the paper check phaseout

Prepare your accounting firm now for a seamless transition

Understanding the change with paper check tax refunds

President Trump’s Executive Order 14247, “Modernizing Payments to and from America’s Bank Account,” eliminates the U.S. government’s practice of issuing paper checks, including tax refunds.

The IRS announced implementation details in IR-2025-94 on September 23, 2025, marking the first step in this broader transition to electronic payments. While this is a federal mandate, it is not clear if state agencies will follow suit.

Why this change benefits your clients

According to the IRS, this transition offers three critical benefits that you can share with concerned clients:

Enhanced security: Paper checks are over 16 times more likely to be lost, stolen, altered, or delayed than electronic payments. Direct deposit also eliminates the risk of checks being returned as undeliverable.
Faster refunds: Electronic refunds are issued in less than 21 days (about 3 weeks) for e-filed returns with direct deposit and no issues, compared to 6 weeks (about 1 and a half months) or longer for paper checks mailed to taxpayers.
Cost efficiency: Electronic payments are significantly more efficient and cost less to process than paper checks.

The scope: Understanding the numbers on tax refunds

During the 2025 filing season, the IRS issued more than 93.5 million individual tax refunds—and 93% of those (almost 87 million) were already delivered via direct deposit. This change primarily affects the remaining 7% of taxpayers who still receive paper checks.

While 7% may sound small, depending on your client base, this could represent a considerable number of clients who need education and assistance with the transition.

What’s changed in UltraTax CS

To align with the executive order, Thomson Reuters has implemented several updates in your UltraTax CS software. Let’s unpack these changes.

Banking screen updates

Screen Bank no longer has the option to allocate a refund to a paper check. Form 8888, Allocation of Refund, can now only be used to allocate a direct deposit of refund to different bank accounts.

Client documents no longer available for proforma

Due to the executive order, several 2024 client-facing documents will not be available for proforma in 2025. These documents are focused on payment methods that are no longer supported. UltraTax CS client documents will be updated in a future release to focus on supported electronic payment and refund alternatives based on IRS guidance for 2025 tax returns.

The affected documents include:

Return instructions:

1040 Return Instructions
1040 Estimate Instructions
1040 Extension Instructions
1040 Amended Instructions
Federal Instructions Insert
Extension Instructions Insert
Amended Instructions Insert

Custom paragraphs:

1040ES Electronic Payments (FI)
Credit Card Payment (FI)
Estimates Credit Card Payment (FI)
Extension Credit Card Payment (FI)
IRS Direct Deposit Limit (FI)
Joint Tax Refunds (FI)

Form-specific instructions:

Forms 656, 1045, 1310, 8689, 8697, 8404, and 9465 Instructions

Action steps for tax professionals for tax season

To ensure a smooth transition for your clients, start preparing now. These five steps will help you identify affected taxpayers, update banking details, and communicate the benefits of electronic refunds effectively.

1. Identify affected clients now

Review your client base to identify the approximately 7% who traditionally receive paper checks. These clients need immediate outreach before filing season begins. Early communication prevents refund delays and reduces last-minute panic calls. You can use the 2024 UltraTax Data Mining Utility to help identify clients that received refunds via paper checks.

2. Start client conversations early

Reach out to affected clients well before filing season. They need to:

Provide valid bank account information for direct deposit
Understand their options if they do not have a bank account
Know that this is an IRS requirement, not a firm policy change

3. Help unbanked clients find solutions

For clients without bank accounts, the IRS is providing alternatives including:

Prepaid debit cards
Digital wallets
Limited exceptions (details forthcoming from the IRS)

Direct clients to resources for opening free or low-cost accounts:

4. Verify and update banking information

Now is the time to:

Review and update all client banking information in UltraTax
Confirm account and routing numbers are accurate
Double-check that information is complete (some clients may have only provided partial information in prior years)
Ensure clients understand the importance of providing correct information to avoid refund delays or returned deposits

Provide your clients the Bank Account Verification form available in UltraTax CS and Client Organizer, where they can verify the bank account information that provided you previously is still accurate. Alternatively, you can email or mail the Data Mining Letter called Bank Account Verification or Bank Account Verification – Next Year.

5. Educate clients on the benefits

Help clients understand this is not just a government mandate—it is an improvement to their refund process:

Their refunds will arrive significantly faster
Their money is much more secure
They avoid the risk of lost or stolen checks
No more trips to the bank to deposit checks
No concerns about checks being delayed in the mail

What about payments to the IRS?

The executive order also applies to payments made to the IRS, but taxpayers should continue using existing payment options until further notice. The IRS will issue additional guidance for filing 2025 taxes prior to the 2026 filing season.

Looking ahead: Future updates on the paper check phaseout

Thomson Reuters is actively monitoring IRS guidance on this transition and will continue updating UltraTax CS as more information becomes available. Watch for future software updates that will include:

Revised client documents focused on electronic payment options
Additional guidance on alternative refund methods
Updates based on final IRS implementation details

Prepare your accounting firm now for a seamless transition

While many of your clients already use direct deposit, this change requires proactive communication with those who do not. The key to a smooth transition is starting these conversations now—before the filing season rush begins.

By identifying affected clients, helping them set up direct deposit or alternative refund methods, and educating them on the benefits, you will prevent refund delays and reduce client anxiety.

Take action today: 

Review your client list to identify those who received paper checks in 2025
Update your client communication templates to address this change
Verify banking information is complete and accurate in UltraTax
Prepare staff to answer questions about the transition

Additional resources: