New IRS rules for mandatory electronic payments will affect individual filings and freelance taxes

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

The IRS offers several electronic payment options for freelance businesses.

To prepare for this change in your freelancing business, it is important to do this 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 companies. 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 direct deposit information is not provided and an exception is not approved, the IRS will hold the refund for six weeks before issuing a paper check.

Paper checks are expected to 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 the way 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 transactions.

Social Security is also subject to mandatory electronic payment rules.

If you receive Social Security benefits, you will need to switch to one of two electronic options. The first is direct deposit, which sends payments directly to your checking or savings account. You can manage this online through your Social Security account. The second option is the Direct Express® Card: a prepaid debit card designed for those who do not have a bank account. To register, visit www.usdirectexpress.com or call 1-800-333-1795.

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

Prepare to pay and receive payments electronically in the future.

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

If you have questions about how this change will impact your freelance business or need help planning estimated tax payments, please contact a trusted tax advisor. Preparing now can ensure a smooth transition to mandatory IRS and Social Security electronic payments without fines, penalties, or disruptions to your freelance income stream.