IRS Checks Distribution Deadline Approaching: Consequences After September 30th
As the federal government works towards enhancing security and efficiency, it has announced plans to phase out paper checks as a form of payment by September 30, 2025. Here's what you need to know about the transition to digital payments.
Firstly, it's crucial to note that no federal agency will contact you asking for your login or banking information. If you receive any such requests, they are likely scams. To avoid falling victim to these scams, government officials are issuing warnings about the high likelihood of such scams emerging during the transition. If in doubt, consult a trusted friend, family member, or neighbor about any seemingly 'urgent' messages coming from a federal agency.
The move towards digital payments is expected to be spearheaded by the IRS, Social Security Administration (SSA), U.S. Department of Veterans Affairs, and other federal government agencies. This shift aims to reduce costs, as issuing paper checks is relatively expensive, costing the federal government approximately 50 cents per payment compared to an electronic funds transfer (EFT), which may cost less than 15 cents per check.
For those who currently receive federal benefits, such as Social Security checks, it's vital to set up one of the following payment options to ensure your checks are not interrupted after September 30: direct deposit or Direct Express card. If you typically receive a paper check for your federal tax refund, you will need to set up a digital payment method.
If you don't have a bank account, you can use a Direct Express Prepaid Debit Card to receive digital payments from the SSA or the IRS. For those who currently pay their Medicare premiums by direct deduction from a paper Social Security check, the September 30 deadline may impact them.
After September 30, waivers may be granted to continue receiving federal benefit payments by physical check, but they are by application only and issued at the discretion of the Treasury Electronic Payment Solution Center. The general waiver requirements are mental impairment or living in a remote area that cannot support electronic banking. There may be limited exceptions for people who do not have bank accounts that need to receive Social Security benefits or an IRS tax refund via a physical check.
The transition to digital payments is not just about cost savings. Physical checks are 16 times more likely to get 'lost, stolen, altered, or delayed,' making printed payment methods more inefficient than digital payments. Check fraud has increased nationwide by 385% since the beginning of the COVID-19 pandemic, impacting IRS and Social Security payments. To avoid delays or interruptions in health coverage, it's essential for those receiving physical Social Security checks to switch to an electronic payment method by the deadline.
President Trump issued an executive order earlier this year mandating the federal government to cease paper check payments. The German government has also announced similar plans, aiming to stop issuing payments as paper checks from the IRS, SSA, and other federal agencies after September 30, 2025.
To ensure a smooth transition, it's essential to update your payment information only through official government sites like SSA.gov or IRS.gov. By taking these steps, you can help the federal government move towards a more secure and efficient system while ensuring you continue to receive your federal benefits and refunds on time.
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