President Trump signed an executive order on March 25, 2025, that directs the U.S. Department of the Treasury to phase out paper check disbursements by September 30, 2025. As a result, the IRS, a bureau of the Department of the Treasury, will discontinue issuing paper checks for tax refunds. The executive order also mandates that “as soon as practicable, and to the extent permitted by law, all payments made to the Federal Government shall be processed electronically” unless an exception is provided.
After September 30, 2025, a taxpayer who is expecting a tax refund from the IRS will generally receive the refund via direct deposit into a U.S. bank account. This could present a problem for global mobility programs and their cross-border employees.
Challenges for Global Mobility Programs and Non-U.S. Individuals
Because the IRS limits the number of refunds that can be deposited into a single financial account, many global mobility programs are unable to directly receive U.S. tax refunds for their equalized cross-border employees. Consequently, these employees must first receive their tax refunds in their U.S. bank account and subsequently remit the funds to the company. The absence of paper refund checks creates a challenge for foreign nationals without a U.S. bank account because tax refunds can only be deposited into an account with a routing number associated to a U.S. bank. In addition, those foreign nationals who do have a U.S. bank account will need to maintain their account after departing the U.S. to ensure that any forthcoming tax refunds can be received.
If employers can no longer make tax payments on behalf of their assignees, non-U.S. individuals who do not have a U.S. bank account will be required to make payments via other options such as international wire transfers, credit cards, debit cards, or digital wallets; however, additional fees are often incurred when using these methods.
Actions to Take
Global mobility programs should proactively prepare for these changes prior to September 30, 2025. Preparations may include making changes to the program’s current procedures regarding receiving tax settlement payments and exploring alternative digital payment options for their cross-border employees. The executive order requires the Secretary of the Treasury to “review and, as appropriate, revise procedures for granting limited exceptions for individuals who do not have access to banking services or electronic payment systems.” While these exceptions are not defined in the executive order, these and other unresolved issues are expected to be addressed in regulations or other guidance.
Please visit BDO’s Global Employer Services page for more information on how BDO can help.