The U.S. Treasury Department is set to discontinue sending paper checks, including those for Social Security and tax refunds, starting September 30. This decision aligns with a broader effort to encourage the use of electronic payment methods. While the initiative affects most recipients, there are a few exceptions available for specific situations.
Issuing a paper check costs approximately 50 cents, contrasted with less than 15 cents for an electronic transfer. The shift to electronic payments aims not only to reduce costs but also to mitigate risks associated with fraud, theft, and payment delays. According to Treasury data, paper checks have a significantly higher likelihood of being lost, stolen, or altered compared to electronic payments.
The federal initiative has its roots in an executive order signed by former President Donald Trump, which sought to eliminate the financial and logistical burdens of paper checks. This move is in response to a concerning rise in mail theft incidents and inefficiencies linked with physical checks.
Currently, a small fraction of Social Security beneficiaries—less than 1%—still receive paper checks. As of September, this number equated to approximately 390,800 individuals. States like California, Texas, and Florida have seen significant numbers of beneficiaries relying on mail checks. To facilitate the transition, the Social Security Administration is proactively reaching out to these beneficiaries and providing guidance on enrolling in direct deposit or obtaining Direct Express debit cards for those without bank accounts.
The agency has stated that individuals must switch to electronic payment options to avoid disruptions in their benefits. While exemptions for continuing to receive paper checks are available, they are limited to specific circumstances, such as severe mental impairments or geographical isolation. Furthermore, anyone still receiving checks is advised to enroll in direct deposit by contacting Treasury or visiting its website.
In terms of tax refunds, the IRS announced the phase-out of paper checks for individual taxpayers will begin on the aforementioned date. Taxpayers who miss the September deadline and have opted for extensions may face additional challenges if they rely on paper checks, especially since millions are accustomed to receiving refunds via direct deposit.
A recent IRS report revealed that a significant majority of tax refunds—over 93 million—were issued electronically by early May of the current year, with 86.9 million refunds delivered through direct deposit. This statistic highlights the gradual transition toward electronic methods, with only about 7% of individual taxpayers still opting for paper checks.
Tax law experts emphasize that the elderly, disabled individuals, and those without bank accounts may encounter difficulties during this transition. There are concerns that abruptly shifting the majority of refunds to electronic payments may result in confusion, especially given the various stages at which tax returns may currently be in the processing pipeline.
To assist taxpayers in adapting, the IRS has encouraged individuals who usually receive paper checks to start making arrangements for direct deposit. Alternative options, such as prepaid debit cards and digital wallets, are also being promoted.
Local tax authorities, such as Michigan’s Department of Treasury, have not yet altered their policy on issuing paper checks, yet taxpayers are advised to remain informed about this ongoing transition.
Overall, as the U.S. government moves toward a more digital financial transaction landscape, those who have historically relied on paper checks face the challenge of adapting to new electronic payment methods. The push aims to streamline federal payments while reducing costs and enhancing security.
