On March 25^th, 2025, President Donald Trump issued Executive Order 4247 (“EO 4247“) directing the U.S. Department of the Treasury to transition all federal disbursements and collections into electronic format; effectively ending the use of paper cheques. By September 30^th, 2025, paper cheques for federal payments (notably tax refunds and social security payments) will cease.

How is this relevant to Canadians?

Hurdle for Canadians

EO 4247 may represent a hurdle to Canadians who don’t have a U.S. bank account yet are expecting a refund. The IRS will only direct deposit refunds into a U.S. bank account in the taxpayer’s name. Therefore, Canadians who can’t open a U.S. bank account, because they can’t meet the requirements (local address, social security number (SSN) or individual taxpayer identification number (ITIN)), must proactively consider the impact of EO 4247. In the past, those Canadians could expect a paper refund cheque to be posted to their Canadian address if no U.S. bank account was provided. This may no longer be the case.

Exceptions Allowed

EO 4247 does provide the U.S. Treasury Department some limited exceptions if electronic payment is not possible notably, if the individual lacks access to U.S. banking services or electronic payment. This would permit the issuance of paper cheques.

What is unclear is whether such exceptions apply (or are available) to non-U.S. taxpayers? If the U.S. Treasury Department opts to take a narrow interpretation of these limited exceptions, it can be unfavorable to Canadian resident taxpayers with very limited alternative options available (if any).

To Whom It May Concern

This EO 4247 may also be a concern to U.S. citizens living in Canada who must file a U.S. tax return annually. If they are owed a tax refund, do they need a U.S. bank account to receive their refund or can they hope to rely on one of the limited exceptions to receive a refund by paper cheque? Requiring an elderly U.S. citizen living in Canada to open a U.S. bank account for a tax refund can be quite troublesome to that individual.

Foreign students, employees working outside the U.S. and temporary workers or investors who must file a U.S. tax return to reclaim taxes withheld may be expected to have a U.S. bank account. Yet, many do not have a U.S. bank account so will they be able to receive their refund?

Canadian entrepreneurs doing business in the U.S. will need to consider opening a U.S. bank account to receive any refund or other federal disbursements.

FIRPTA and Canadian Snowbirds

After September 30^th, the Foreign Investment in Real Property Tax Act (FIRPTA) withholdings on Form 8288 will have to be paid electronically. Canadian snowbirds selling their U.S. property (i.e. FIRPTA transaction) can end-up in a buyer-seller’s nightmare if the buyer cannot make the electronic payment. Such can lead to delays in the closing of the transaction, penalties applied to the buyer for late payment and the seller may have to wait longer to claim the withholding. As an example, a Canadian snowbird opts to sell their U.S. condo to a family friend who is also a Canadian resident. The buyer (i.e. Canadian family friend) will need to pay the FIRPTA withholding electronically from a U.S. bank account.

This EO 4247 has attracted very little attention in Canada, but cross-border advisors may want to proactively raise its implications to their clients.