In a major shift in how the U.S. government handles financial transactions, President Donald Trump signed an executive order mandating the end of paper cheques for all federal payments and disbursements. Effective September 30, 2025, the U.S. Treasury will no longer accept or issue paper cheques, citing concerns about fraud, theft, loss, and alteration — issues that have cost the government significantly.
This change will affect several key areas, including:
– IRS tax payments and refunds
– Social Security benefits
– Veterans’ compensation
How will this change affect you north of the border?
Historically if you were a U.S. citizen, green card holder, or non-resident required to file in the U.S. and had tax owing, you could mail USD cheques or bank drafts drawn on a Canadian bank to the IRS. If you had a refund due, the IRS would issue a refund cheque. After September 30, 2025, these options may no longer be available. All payments to and from the IRS are to be transitioned to be handled electronically, and refunds will only be issued via direct deposit into a U.S. bank account.
This raises a significant concern for many individuals in Canada who do not have a U.S. bank account.
The IRS has acknowledged that certain groups such as international taxpayers will require additional processes to make the transition to digital transactions but what this means is yet to be seen.
The IRS director, Denise Davis, has recently stated that in transitioning individuals who the IRS does not have banking information for, they will begin by sending them a letter requesting banking information in which taxpayers can respond. Taxpayers may also be able to log into their IRS online account and provide an exemption exception or call a dedicated line to provide the exemption exception. If a taxpayer has an expected refund and does not respond to the request letter for banking information, the IRS has stated they will hold the refund for six weeks pending a response, after which they will then process the refund. Thus, lengthy delays could result if you do not have banking information and have not provided an exemption exception.
One alternative If you are due a tax refund but do not have access to a U.S. bank account is to apply your overpayment to next year’s taxes. This avoids the need to have your refund deposited while you wait for further guidance from the IRS.
If you already have a bank account in the U.S. then this change should not be a big transition; in fact, if you have an account in the U.S., we can set up direct deposit or direct pay from that bank account when we efile the tax return. The direct pay can be set up for both the balance owing when your return is filed and any required estimated payments.
If you are required to make a payment to the IRS and do not have a bank account in the U.S., you can use:
- 1. Electronic Federal Tax Payment System (“EFTPS”) of the IRS
https://www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system - 2. Credit card payments
https://www.irs.gov/payments/pay-your-taxes-by-debit-or-credit-card - 3. International wire transfers
https://www.irs.gov/individuals/international-taxpayers/foreign-electronic-payments-tax-typecodes
Be aware that these alternatives may involve additional fees and require more time to set up, so early planning is advised to ensure payments are still on time.
As of now, the IRS has noted that they will continue to update the guidance as they learn more from their digital transition efforts. Hopefully, further guidance will be issued before the 2026 tax filing season and relief will come for those not residing in the U.S.
If you have any questions, do not hesitate to contact your Cameron Izard Snell LLP advisor.
This publication contains information in summary form, current as of the date of publication, and is intended for general guidance only. It should not be regarded as comprehensive or a substitute for personal advice. Before taking any particular course of action, contact Cameron Izard Snell LLP or another professional advisor to discuss these matters in the context of your particular circumstances. We accept no responsibility for any loss or damage occasioned by your reliance on information contained in this publication.