Pramod Kumar Siva
International tax practitioner, South Carolina / Texas A&M University School of Law
pramod.kumars@tamu.edu

Introduction: EO 14247 and the end of paper refunds

On 25 March 2025, the US President issued EO 4247, entitled Modernizing Payments To and From America’s Bank Account.^[1] This order directs the US Department of the Treasury to transition all federal disbursements and collections into electronic formats, effectively eliminating the government’s longstanding use of paper cheques.^[2] By 30 September 2025, paper cheques for federal payments, including tax refunds, social security and vendor payments, will cease to the extent permitted by law. The policy aims to increase efficiency, reduce costs and enhance payment security, while defending against financial fraud and improper payments.

The US Department of the Treasury is seeking feedback on aiding ‘unbanked and underbanked’ groups in transitioning to digital payments, but there’s no clear guidance for non-US taxpayers abroad who lack access to a US bank account. Experts warn this change could hinder legitimate refunds for cross-border taxpayers.

This article discusses the global challenges of implementing EO 14247, especially in regard to refunding non-US payees, and makes suggestions on how the US Department of the Treasury and the Internal Revenue Service (IRS) could adjust their policies so that international taxpayers are not left behind.

Cross-border challenges under EO 14247 

A lack of US banking access for international taxpayers

A fundamental hurdle is that many overseas taxpayers do not have a US bank account in order to receive an electronic refund. The IRS can only directly deposit refunds into a US bank account in the taxpayer’s own name. This rule will exclude millions of Americans and non-US persons abroad who are not able to meet the US bank account opening requirements (such as having a local address, identification (ID) or a social security number (SSN)/individual taxpayer identification number (ITIN)). Many US expats close their US bank accounts when they move, not wanting the hassle of keeping an account solely for rare IRS payments.

Until now, these taxpayers could fall back on the paper refund cheque posted to their foreign address by default if no US bank account was provided. Indeed, many international taxpayers (for example, foreign students, temporary workers or investors filing Form 1040-NR) have relied on a posted cheque because they cannot easily arrange a US bank for direct deposits. Eliminating that option without a robust alternative could leave a segment of taxpayers with no practical way to receive their money.

EO 14247 does empower the US Treasury Department to allow exceptions. The order instructs the Secretary of the Treasury to grant limited exceptions where electronic payment is not feasible, including for individuals who ‘lack access to banking services or electronic payment systems’. In theory, this could permit the continued use of paper cheques (or government-issued prepaid debit cards) for those that are unable to use electronic methods. The open question is whether the Treasury Department will interpret this exception to include non-US taxpayers abroad. Advocates have urged that the lack of US banking access overseas be treated on a par with those that have a domestic unbanked status. If so, a non-resident without a US bank account could request an alternative form of disbursement. However, given the EO’s mandate to eliminate paper wherever possible, there is scepticism that the IRS will readily grant such exceptions in practice. Without explicit guidance, many fear a rigid form of implementation that overlooks foreign taxpayers’ practical constraints.

Elevated fraud and identity theft risks

Ironically, a policy aimed at reducing fraud may introduce new fraud vectors in cross-border contexts. Paper cheques have well-known vulnerabilities (postage theft, alteration and counterfeiting). Yet, going fully digital does not eliminate fraud; it just changes the battleground. International taxpayers could face elevated identity theft risks as they are pushed into unfamiliar financial arrangements. For example, a foreign taxpayer desperate for a US bank account might be lured in by dubious intermediaries offering a service wherein they receive IRS refunds for a fee. Unscrupulous tax preparers or ‘refund agents’ in some countries could exploit the situation, persuading clients to input the preparer’s own US bank account and then absconding with the funds, a form of misappropriation that the IRS’ payee name rule is supposed to prevent.  

The risk of refund misallocation and administrative errors

Major changes to refund methods also present risks of misrouting and administrative errors. A mistyped account number or other clerical mistake could cause a refund to bounce without the safety net of an automatic paper reissue, potentially leaving money in limbo. Moreover, in regard to global mobility cases, a refund might reach the taxpayer but not the party ultimately entitled to it. Since the IRS can only deposit funds into an account in the individual’s name, employers can no longer directly collect an assignee’s refund; without a cheque to endorse, the employee must receive the funds and then remit them to the company. If the employee fails to do so, intentionally or otherwise, the employer may never recover the money.

Implications for key stakeholder groups

Expatriate assignees and US taxpayers abroad

Expatriate assignees, employees working outside their home country, including US citizens abroad and foreign nationals in the US, are on the front lines of these changes. Many Americans abroad still have to file US tax returns (and may be owed refunds), despite living overseas. Historically, a US citizen abroad without a US bank account could simply wait for a refund check. Now that the safety valve is closing, these individuals must adapt quickly. Certain US credit unions and Fintech platforms (eg, Wise) allow these expats to obtain US bank details and receive direct deposits from the IRS, but not everyone is willing to use such workarounds. It is critical that the IRS clarify how it will handle cases where electronic payments are not possible (for example, a checkbox for ‘no bank access’ or a prepaid debit card alternative). Without clear guidance, affected taxpayers could face serious uncertainty and cash flow problems if their refunds end up in limbo.

Foreign nationals on assignment in the US likewise will face challenges. They often have difficulty opening US bank accounts and, when they depart after a short stint in the country, they may be owed a tax refund months later. In the past, employers would intercept the refund cheque posted to a US address in regard to the employee’s final tax return. Now, they must be far more proactive, advising departing assignees to keep their US bank accounts open until their final tax refunds arrive, or arranging a safe alternative solution before the employee leaves. Without such planning, these globally mobile individuals could become unintended casualties of a policy aimed at a domestic problem.

Other international taxpayers and entities

Many other non-resident taxpayers, from foreign students and temporary workers to investors, file US tax returns to reclaim overwithheld taxes, yet few maintain US bank accounts. Up until now, the IRS posted refunds to these individuals at foreign addresses, but, under EO 14247, that option will vanish. The change is daunting: those who have spent time in the US (such as students) might have opened a local bank account during their stay, but others abroad will now need to find alternative ways to receive their money.

Foreign business entities face similar barriers. For example, a foreign corporation reclaiming withheld US tax or a non-US estate with US assets typically do not have a US bank account. In the past, the IRS would post a refund cheque to a US-based agent or attorney for the entity. Now, unless the entity obtains US banking or uses an agent’s escrow account, there is no straightforward way to receive such a refund. In the interim, foreign businesses expecting refunds should appoint a US fiscal agent with a bank account or request an IRS exception early. The IRS should notify international filers of these changes, so they aren’t caught off guard.

Practitioner guidance

To navigate this transition, international tax practitioners should take several proactive steps, as follows:

• educate and prepare clients: alert affected clients (expatriates, non-residents, foreign businesses) about the end of paper refunds and help them secure a viable US banking option. This may involve assisting expats with opening accounts or coordinating with employers to keep assignees’ US accounts open until refunds are received;

• adjust tax compliance processes: review and adjust tax equalisation policies and other procedures for corporate clients. Plan for exceptions where necessary and refine withholding processes now to minimise large refunds that have to be clawed back later; and

• stay informed and advocate: stay informed on the Department of the Treasury/IRS guidance and be ready to guide clients through any new requirements. Work with professional organisations to advocate for practical solutions (like expanded exceptions or international payment options) that address client needs. In all cases, early communication and planning can prevent refunds from falling through the cracks.

Policy recommendations

To conclude, several policy recommendations are detailed below that the US authorities should consider in order to address the highlighted gaps and facilitate a smoother transition for international taxpayers:^[3]

• clarify and broaden the ‘no banking access’ exception: the Department of the Treasury should explicitly state that the exception for lacking banking services covers foreign taxpayers without a US bank account. Such clarification would empower IRS agents to issue refunds via alternative means (eg, paper cheques or Treasury debit cards) when encountering a non-resident or overseas US person who certifies that they cannot obtain a suitable bank account. The threshold for this exception should be reasonable, for instance, requiring an ITIN holder without a US address to attempt online bank account opening is sufficient; if rejected, that should qualify as a lack of access to US banking services. Clear criteria will prevent confusion and inconsistent treatment;

• enable international direct deposits: in the long run, the US should modernise tax processes by eliminating cheques and enabling international electronic payments. We recommend that the Department of the Treasury explore partnerships with global payment networks to allow Automated Clearing House (ACH)-like transfers to foreign bank accounts. One approach could be leveraging International Bank Account Number (IBAN) and Society for Worldwide Interbank Financial Telecommunication (SWIFT) networks: many countries successfully pay tax refunds or benefits to foreign banks via IBAN. The IRS could collect IBAN information on Form 8805 (for foreign partner withholding refunds) or on Form 1040-NR schedules and coordinate with the Treasury Fiscal Service to send wire transfers. Even if the initial rollout is limited to certain countries or large-dollar refunds, it would set the stage for truly global e-payments. The costs of currency conversion or wire transfer fees could be borne by the recipients (with disclosure), which many would gladly pay to avoid the hassle involving US account logistics;

• expand the use of Treasury debit cards for the unbanked internationally: the Treasury Department already issues prepaid debit cards (Direct Express cards) for unbanked social security recipients domestically. A similar programme could be extended internationally. For example, the IRS could offer a prepaid Visa/MasterCard to which the refund is loaded and send that card to the taxpayer (secured by identity verification). The card could be used globally wherever the network is accepted or cashed out. While this solution doesn’t solve all the potential problems that could occur (cards could be lost in the post and usage may incur ATM fees), it provides an electronic yet accessible medium for those who are unable to participate in bank transfers. The prepaid card approach might especially help US expatriates in regions where they can easily use such cards;

• enhance fraud detection and taxpayer authentication: with more refunds going digital, the IRS should bolster identity verification for overseas payments. For instance, implementing a two-factor authentication process for adding or changing direct deposit information on file (perhaps using the IRS online account system) could help prevent fraud. The IRS may also coordinate with foreign financial institutions to confirm account ownership if a foreign payment route is used. Additionally, a public awareness campaign targeted at international taxpayers, warning them about potential scams and detailing official procedures, would be valuable. The Department of the Treasury’s request for information (RFI) has been used to raise public awareness of unbanked Americans;^[4] that effort should extend across borders, possibly in multiple languages, through embassies or international student offices; and

• provide transitional relief and grace periods: it may be prudent for the IRS to allow for a transitional grace period beyond 30 September 2025, for certain refund categories. For example, refunds on 2024 returns for non-resident filers could be temporarily exempt from the no-cheque rule until the relevant systems are in place. Alternatively, the IRS could initially issue a letter to affected taxpayers saying, ‘we intend to pay your refund electronically, but you have not provided details; please respond within X days’, and if there is no response, then the IRS should issue a cheque as a one-time exception. This kind of soft landing would prevent funds from getting stuck and would give taxpayers one more chance to comply. As systems improve, the reliance on such measures would reduce. 

Implementing these recommendations would require effort and coordination, but they are achievable steps towards a more inclusive form of modernisation of the tax system. The spirit of EO 14247 is not to punish those without US banking access, but to drag federal payments into the 21st century. Ensuring that no taxpayer is left behind, whether in Kansas or Kenya, is essential to the credibility and fairness of this initiative.

Conclusion 

EO 14247 represents a notable shift in US government–public interactions, particularly for international tax and taxpayers. The transition to a digital-first system ends the outdated paper cheque process, addressing inefficiencies and fraud, but raising concerns about accessibility and fairness for expats, non-resident filers and multinational companies. Adapting to this change will require obtaining US banking access and revising internal procedures.

Awareness of these challenges is growing, and international tax practitioners play a crucial role in bridging the gaps by educating clients and collaborating with policymakers. The coming months present an opportunity for practitioners to share insights with the Treasury Department, which can implement solutions, prioritising efficiency, security and fairness. They must prepare clients for a world without cheques, emphasising the importance of readiness and engagement in this global shift.

The views expressed herein are solely those of the author and do not reflect the official positions of Texas A&M University School of Law or his employer.