IRS to Eliminate Paper Checks for Payments, Refunds
May 15, 2025
The Internal Revenue Service will discontinue the use of paper checks for most federal payments and disbursements effective Sept. 30, 2025.
This change will impact title agents and closing attorneys handling closings in the United States involving foreign sellers and facilitating payments for Foreign Investment in Real Property Tax Act (FIRPTA) transactions. In general, when foreign sellers sell U.S. real estate, buyers must withhold 15% of the sale price and send it to the Treasury.
All tax refunds and payments will be issued electronically and directly deposited only to U.S. bank accounts. The IRS emphasizes online payment methods as the preferred way to send money, including Direct Pay, Electronic Funds Withdrawal (EFW) and the Electronic Federal Tax Payment System (EFTPS).
Kat Rodgers of Foreign Tax CPA, an international CPA firm representing non-U.S. sellers, said her firm is advising stakeholders—including legal counsel, title companies and foreign clients—to prepare for this transition now:
- Establish a U.S. bank account early in the transaction process
- Where that is not feasible, explore the use of a qualified intermediary or escrow agent with refund disbursement capabilities
- Communicate this update clearly to foreign sellers closing in late 2025 or thereafter to avoid refund delays
This change underscores the IRS's shift toward full electronic payment systems and heightened fraud prevention protocols.
Contact ALTA at 202-296-3671 or [email protected].