ARTICLE | September 08, 2025

What’s Changing?

 On September 30, 2025, Executive Order 14247 takes effect. From that date forward:

• All IRS payments and refunds must be electronic.

• Paper checks are eliminated, except in extremely limited cases such as national security emergencies (for example, if a hurricane knocks out banking infrastructure, taxpayers in affected areas might get a waiver to use paper temporarily) or lack of banking access (people in rural or underserved areas without digital banking access).
• Checks drawn on Canadian banks will NOT be accepted.

This change applies to individuals, businesses, estates, trusts, and nonprofits.

Why It Matters for Canadians

For decades, U.S. expats in Canada have mailed USD checks drawn on Canadian banks to the IRS. That lifeline is closing:

• Before Sept. 30, 2025: Paper checks might still be processed, but acceptance isn’t guaranteed.
• After Sept. 30, 2025: Only electronic payments will be processed. Refunds must be issued via direct deposit into a U.S. bank account.

This raises challenges for Canadians without a U.S. account or who rely on paper-based processes.

How to Pay the IRS from Canada

1. International Wire Transfers

• Use the IRS’s Foreign Electronic Payments – Tax Type Codes worksheet.
• Your Canadian bank must route USD through a U.S. correspondent bank.
• Costs: Most banks charge $30–$50 per wire, plus a foreign exchange spread. Multiple payments per year can add up.
• Tip: Some cross-border banks (e.g., RBC/TD cross-border services, BMO Harris) may offer more cost-effective solutions.

2. EFTPS (Electronic Federal Tax Payment System)

• Enrollment takes about a week, as the IRS mails a PIN by post. Mail delays across the border may stretch this timeline.
• Not all Canadian banks support U.S.-bound ACH transfers, so check in advance, however, the following historically have:
  • Royal Bank of Canada (RBC)
  • Toronto Dominion (TD) Bank
  • Bank of Montreal (BMO)
  • Scotiabank

Warning: If enrollment is incomplete close to a payment deadline, you risk late payment penalties.

3. IRS Direct Pay

• Available only for U.S. bank accounts. Canadian USD accounts typically do not qualify.

4. Credit Card or Digital Wallet

• Payments can be made through IRS-approved third-party processors.
• Fees vary by provider and transaction size (typically 1.8%–2%).
• A practical option for one-time or smaller balances, but potentially costly for large payments.

How to Receive Refunds

Refunds may present an even greater challenge.

• Before Sept. 30, 2025: Paper refund checks may still be mailed to Canadian addresses.
• After Sept. 30, 2025: Refunds will only be sent via direct deposit into a U.S. bank account.

What if you don’t have a U.S. account?

• Joint accounts: The IRS typically requires the refund account to be in the taxpayer’s name. Using a joint account with a relative may be possible, but guidance is unclear.
• Fintech solutions: Services like Wise, Revolut, or Payoneer are not currently recognized by the IRS.
• Refund as a credit: Taxpayers may consider applying overpayments to the following year’s return, but this requires planning.
• No formal alternative has been announced for expats without U.S. accounts—a gap flagged by the International Bar Association.

What About State Taxes?

This mandate applies only to federal IRS payments and refunds.

• Many states still accept paper checks.
• However, states like California and New York increasingly encourage electronic payments.
• Expats with state obligations should confirm rules with each state, as requirements differ.

What Happens If You Ignore the Deadline?

After September 30, 2025, paper checks will likely be rejected. That creates two risks:

1. Late payment penalties: If the IRS does not process your payment, you’ll be deemed late.
2. Interest accrual: Balances continue to accrue daily interest until properly paid.

This isn’t a “soft” transition—taxpayers who don’t adapt could face costly consequence

✅  Recommended Next Steps

1. Don’t wait—transition planning should begin now.

2. Explore EFTPS enrollment if your Canadian bank supports U.S. ACH transfers.

3. Contact your bank to confirm whether they can initiate USD international wires to the IRS.

4. Consider using a Canadian Bank with a U.S. presence to bridge the gap, such as RBC, TD Bank, BMO, or CIBC.

5. Consider opening a U.S. bank account (even a minimal one) for refund purposes.

6. Evaluate credit card or digital wallet payments for flexibility.

7. Plan for refunds—decide whether to open a U.S. account, or apply future overpayments as credits.

Stay informed: Monitor IRS updates for expat carve-outs or additional guidance.

Final Takeaway

For Canadian-based U.S. taxpayers—individuals, businesses, estates, and nonprofits—the move to all-electronic payments is a compliance tipping point.

• Paper checks are out.
• Electronic payments are in.
• Refunds require a U.S. bank account—or creative planning until the IRS issues further guidance.

Act now. Early preparation will prevent rejected payments, delayed refunds, and avoidable penalties.