Introduction: A Major Shift in How the IRS Handles Payments

The Internal Revenue Service is undergoing a significant transformation that will directly impact international taxpayers. As part of its modernization efforts, the IRS is moving away from paper-based systems and toward fully digital processing.

For foreign nationals, foreign corporations, and high net worth individuals with US tax exposure, this shift is more than operational—it changes how taxes are paid, refunds are received, and compliance is maintained.

For those earning abroad or earning in foreign jurisdictions such as the UK, Europe, Canada, Australia, Singapore, Dubai, Hong Kong, and Brazil, understanding this transition is critical to avoiding delays, penalties, and unnecessary costs tied to IRS tax payments.

The End of Paper Checks: What Changed

One of the most notable milestones in this transition occurred on September 30, 2025, when the IRS significantly reduced the issuance of paper checks for tax refunds.

Historically, paper-based payments were widely used by international taxpayers—particularly those without US bank accounts. These checks, issued by the US Treasury, were mailed overseas and served as the primary method of receiving refunds.

This was especially common in FIRPTA-related transactions, where foreign sellers of US real estate often received withholding refunds via physical checks.

While the system was far from efficient, it was familiar—and it worked.

Now, that system is being phased out.

Why This Matters for International Taxpayers

The move toward electronic payments is designed to reduce administrative costs and improve efficiency. The IRS already processes more than $5 trillion annually through electronic systems and estimates that eliminating paper checks could save approximately $450 million per year.

However, for international taxpayers, the implications are more complex.

Many foreign nationals and global investors do not maintain US-based banking relationships. Without access to a US-routable account, receiving refunds or making electronic IRS tax payments becomes significantly more challenging.

This shift impacts a wide range of individuals and entities, including:

• Foreign investors in US real estate (FIRPTA)
• International entrepreneurs working with foreign corporations
• Professionals in sports and entertainment with US income streams
• High net worth individuals managing cross-border assets

FIRPTA and Cross-Border Real Estate: A Key Pressure Point

FIRPTA (Foreign Investment in Real Property Tax Act) transactions highlight the practical challenges of this transition.

Historically:

• Approximately 25–30% of FIRPTA refunds were issued to foreign sellers without US bank accounts
• Paper checks were mailed internationally
• Processing and access to funds often took 6–10 weeks

For many sellers, particularly those based in foreign jurisdictions like Europe, Canada, Australia, Singapore, Hong Kong, or Brazil, this delay was inconvenient but manageable.

Under the new electronic framework, however, the reliance on paper checks is no longer sustainable.

Without a compliant account capable of receiving electronic payments, foreign sellers may face:

• Delayed or inaccessible refunds
• Increased administrative friction
• Additional compliance challenges

The Push Toward Electronic IRS Tax Payments

According to IRS Fact Sheet 2026-02, the agency is accelerating its transition toward electronic-only systems for balance-due payments and estimated taxes.

This includes increased reliance on platforms such as:

• Electronic Federal Tax Payment System (EFTPS)
• Direct Pay and other digital payment channels

For US-based taxpayers, this shift improves efficiency.

For those earning abroad, however, it introduces a structural challenge: these systems typically require a US bank account with routing capabilities.

The Access Problem for Foreign Nationals

Access to US banking infrastructure remains one of the biggest obstacles for international taxpayers.

Opening a traditional US bank account can be difficult for foreign nationals due to strict regulatory requirements, including identity verification standards tied to US banking laws such as the Patriot Act.

As a result, many international taxpayers lack access to accounts that are:

• Compatible with IRS electronic payment systems
• Capable of receiving US Treasury disbursements
• Efficient for handling USD transactions

Without this access, taxpayers may encounter:

• Returned or rejected payments
• Delays in receiving refunds
• Challenges meeting quarterly estimated tax obligations

For high net worth individuals and global investors, these inefficiencies can create both financial and operational risks.

Why This Matters for Those Earning Abroad

For professionals and investors earning abroad—particularly in regions like the UK, Europe, Canada, Australia, Singapore, Hong Kong, and Brazil—this shift adds another layer to cross-border financial planning.

Income may be generated in multiple currencies, but IRS tax payments must still be made in US dollars through compliant systems.

This creates a dual challenge:

1. Managing foreign exchange risk
2. Ensuring access to appropriate payment infrastructure

For those already navigating multi-currency income streams, the lack of a seamless USD payment solution can significantly complicate compliance.

A Smarter Approach: Preparing for the Shift

As the IRS continues its transition to electronic payments, proactive planning is essential.

International taxpayers should consider establishing access to USD payment solutions that allow them to:

• Receive electronic refunds from the US Treasury
• Make timely estimated IRS tax payments
• Avoid reliance on outdated paper-based systems

This is particularly important for:

• Foreign corporations with US tax exposure
• High net worth individuals managing global portfolios
• Professionals in sports and entertainment with cross-border income

Integrating Currency and Tax Planning

The shift toward electronic payments reinforces a broader trend: the need to integrate currency strategy with tax planning.

As discussed in Currency Planning for US Expats, managing foreign exchange risk is already a key priority for those earning in foreign jurisdictions.

Now, access to the right payment infrastructure is equally critical.

Combining both elements allows international taxpayers to:

• Optimize the timing of currency conversions
• Reduce transaction costs
• Ensure compliance with US tax obligations
• Improve overall financial efficiency

Frequently Asked Questions (FAQ)

Can foreign nationals still receive IRS refunds by check?

In most cases, the IRS is moving away from paper checks, making electronic payment methods increasingly necessary.

How do international taxpayers make IRS tax payments electronically?

Electronic payments are typically made through systems like EFTPS, which require access to a US-routable bank account.

What is the biggest challenge for foreign taxpayers?

The primary issue is access to compliant USD accounts capable of sending and receiving electronic IRS payments.

Does this impact FIRPTA refunds?

Yes. FIRPTA transactions, which historically relied on paper checks, are significantly affected by the shift to electronic payments.

Final Thoughts: Adapt Now or Risk Delays

The IRS’s move toward electronic payments is not a temporary adjustment—it represents a permanent shift in how the US tax system operates.

For foreign nationals, foreign corporations, and high net worth individuals operating globally, adapting to this change is essential.

Those who fail to prepare may face delays, inefficiencies, and compliance challenges—particularly when managing IRS tax payments from abroad.

If you are an international taxpayer earning abroad or managing US tax obligations from foreign jurisdictions, now is the time to review your payment infrastructure.

Work with a specialist in foreign exchange and cross-border payments to ensure you have the right systems in place to navigate this transition efficiently and avoid unnecessary costs.