Treasury Proposes Limiting Federal Paper Checks to Rare Cases

The Treasury Department's Bureau of the Fiscal Service on April 29, 2026, published a notice of proposed rulemaking in the Federal Register to amend regulations on federal agency disbursements, restricting paper checks to limited exceptions where electronic payments are not feasible. The proposal, signed by President Donald Trump, opens a public comment period ending June 15, 2026.

The change affects recipients of federal payments across programs including Social Security benefits, which serve about 70 million people monthly per the Social Security Administration's public data, tax refunds processed by the IRS for over 150 million filers annually according to IRS statistics, and veterans' benefits distributed to roughly 9 million individuals each year based on Department of Veterans Affairs reports.

Federal disbursements total more than $4 trillion yearly, with electronic transfers already comprising the majority, but paper checks still account for about 60 million payments annually as noted in prior Fiscal Service analyses.

Under the current regulation, federal agencies can issue paper checks in circumstances such as when recipients lack bank accounts or in emergencies, per the existing 31 CFR Part 208 framework established in 1998. The proposed amendment, driven by Executive Order 14247 issued by President Trump, requires agencies to cease paper checks for all disbursements permitted by law and revises exception procedures to make them rarer and more scrutinized.

If finalized, the rule would take effect 30 days after publication of the final version in the Federal Register, with full implementation targeted by the end of 2027 based on the executive order's directives outlined in the notice.

Agencies must now review and update their payment processes within 180 days of the final rule's effective date, per the proposed text, triggering internal audits and potential system upgrades across departments like Social Security and the IRS. The rulemaking sets a June 15, 2026, deadline for public input, after which Fiscal Service will analyze comments and could issue a final rule by late 2026, initiating compliance timelines for federal entities.

This also activates reporting requirements to Congress on exception volumes, as specified in the executive order referenced in the notice, ensuring ongoing oversight of any remaining paper payments.

The original regulation on electronic funds transfers dates to a 1996 law mandating electronic payments for most federal disbursements, with the current version finalized in 2010 under the Obama administration. Executive Order 14247 builds on prior efforts, including a 2011 Treasury directive that waived electronic requirements for some low-value payments, now set for stricter limits per the Federal Register document.