As part of the modernization of the federal government and with a goal of improving efficiency and reducing fraud, the president signed an executive order on March 25 to phase out the use of paper checks by the U.S. government. This is expected to impact those receiving checks in the mail from the IRS or Social Security, as well as those sending tax payments to the IRS. For those receiving payments, paper checks are expected to end after September 30, subject to certain exceptions. For those sending payments to the federal government, the mandate is to switch to electronic method “as soon as practicable.” While the deadline for transition remains unclear, it is recommended that taxpayers begin to take proactive steps to migrate to electronic payment methods.
What To Do:
Individuals and Businesses
The most convenient way to make future tax payments will be to use the IRS Direct Pay program. This allows individuals and businesses to authorize a direct transfer from their bank account on a prescribed date to make both estimated and filing payments.
An optional program, the Electronic Federal Tax Payment System (EFTPS), is also available. This process is more time-consuming and typically used for single payments. To use EFTPS you must register, receive a unique PIN in the mail, and then enter the PIN into your account at least one day prior to the date your payment is due.
Trusts and Estates
Currently, while most payments are eligible for IRS Direct Pay, estates and trusts that are required to make tax payments are only able to use the EFTPS system. This means that those making estate or trust tax payments will need to begin the process at least one week prior to their next payment deadline, allowing time to obtain their PIN.
We recommend consulting with your tax professional to confirm which payment method applies to your situation and to begin setup if necessary.
This change applies to federal tax payments only. For available state and local payment methods, please confirm with your tax professional.
Our team is available to coordinate alongside your tax professional as needed. As a reminder, our private family office, Octavia Group, provides a range of services — from tax coordination and expense management to tech support — for a monthly fee.
Ferguson Wellman, Octavia Group and West Bearing do not provide tax, legal, insurance or medical advice. This material has been prepared for general educational and informational purposes only and not as a substitute for qualified counsel. You should consult qualified professionals to understand how this information may, or may not, apply specifically to you.