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AICPA recommends careful IRS transition away from paper checks

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1 year ago

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The American Institute of CPAs hopes to smooth the transition away from paper checks at the Internal Revenue Service.

The AICPA sent a letter last week to the Treasury Department offering feedback and recommendations on the implementation of President Trump’s Executive Order 14247, Modernizing Payments To and From America’s Bank Accounts. The order requires the Treasury to stop issuing paper checks for all federal disbursements, such as tax refunds, and requires all payments made by the federal government to be electronically processed. 

The order also mandates that issuing paper checks for federal disbursements should cease by Sept. 30, 2025, and that all federal receipts should be processed electronically as soon as practicable to the extent permitted by law. That seems like too abrupt a transition, however.

The AICPA acknowledged that the adoption of an electronic system for federal disbursements and receipts would increase efficiency, reduce costs and significantly diminish the occurrence of lost or stolen checks. The AICPA noted it has supported the transition to electronic payments for federal disbursements and receipts, but pointed out there are challenges with implementing a system that imposes a mandate on taxpayers to have a U.S. bank account in order to participate. Requiring a U.S. bank account for electronic tax payments could exclude vulnerable taxpayers such as seniors and the “unbanked” population, while international banking rules currently limit automated clearing house transfers with non-U.S. financial institutions.

“For many years, the AICPA has advocated for and supported the modernization of the IRS and its payment systems; although this executive order is a step in the right direction, there are many considerations before implementing changes, which means updated processes and carefully tailored rules will need to be developed,” said Daniel Hauffe, senior manager for tax policy and advocacy with the AICPA, in a statement last Thursday. “The AICPA’s recommendations allow for the modernization of the IRS’ tax payment systems while mitigating the impact of the administrative burden on taxpayers, tax practitioners and the IRS that could be caused by this executive order.”

The AICPA’s letter cites a report from the Treasury Inspector General for Tax Administration on the 2024 filing season saying that, for the most recent tax year, nearly 7 million taxpayers were issued refunds through a method other than electronic payment.  

The AICPA asked the Treasury consider the following recommendations:

  • Implement exceptions to the order for individuals and business entities not physically present in the U.S. that do not have a U.S. bank account. 
  • Exempt temporary non-U.S. individuals – such as short-term business visitors – from electronic payment mandates, allowing them to receive tax refunds by paper check. AICPA also recommended allowing individuals without a Social Security Number or individual taxpayer identification number to make tax payments by check until their taxpayer identification is issued, helping them meet their obligations and avoid penalties. 
  • Expand Electronic Federal Tax Payment System capabilities, which would enable business accounts to submit payments on behalf of individuals for Form 1040 and 1040-NR, including estimated tax payments, extension payments and balances due. There should be no cap on the number of individual transactions a business account can process. 
  • Exempt all trust and estate income tax return filings from the requirements of the order until Form 1041 has been updated with the appropriate information and that implementation of the order be delayed for trusts and estates until Treasury and the IRS can address certain issues concerning the administration of an estate or trust.In addition, the AICPA recommended the Treasury and the IRS allow trusts and estates to pay via IRS Direct Pay, rather than have to set up an EFTPS account. 
  • Provide specific guidance regarding how exceptions will be applied for and granted to qualified taxpayers to whom this order would present an undue burden, including individuals over the age of 65 and taxpayers who are unable or unwilling to obtain U.S. bank accounts. The AICPA also recommends that taxpayers granted an exception have the option to receive tax refunds as a paper check or through a direct express card. 
  • Extend the timeframe for implementation of the order or that, at a minimum, the Secretary offer meaningful transitional rules when facilitating the transition of the federal disbursement and receipt system to being exclusively electronic. 
  • Consider seeking statutory authority for the mandates outlined in the executive order, which would provide a solid foundation for this transition to electronic payments. 
  • Convene a group of stakeholders, including the AICPA, to assist with the establishment of rules and processes for implementing the order.

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Accounting

Embedded AI and Automated Anomaly Detection Reshape Modern Corporate Accounting Frameworks

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1 day ago

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September 13, 2026

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Embedded AI and Automated Anomaly Detection Reshape Modern Corporate Accounting Frameworks

The accounting and audit landscape in 2026

The accounting and audit landscape in 2026 is defined by the full integration of artificial intelligence directly into core enterprise software platforms. Rather than operating as standalone third-party tools, generative AI, automated reconciliation, and continuous anomaly detection are now natively embedded within major ERP engines including SAP, Oracle, Microsoft Dynamics, QuickBooks, and Sage. This technology integration is transforming daily financial operations, internal reporting controls, and external audit workflows.

Recent industry benchmark surveys reveal a widening performance gap

Recent industry benchmark surveys reveal a widening performance gap between finance teams utilizing integrated AI automation and those relying on legacy manual processes. Organizations actively leveraging embedded AI report up to 37% higher revenue per employee, driven by automated invoice matching, instant ledger entries, and predictive cash flow modeling. Routine, high-volume transactional tasks that once required manual intervention are now executed in real time with continuous digital audit trails.

AI introduces new governance and control responsibilities

However, the widespread deployment of embedded AI introduces new governance and control responsibilities for accounting professionals. Auditing standards now mandate strict verification protocols for algorithmically generated journal entries and financial commentary. External auditors are evaluating enterprise AI governance frameworks, reviewing automated rule sets, testing data ingestion pipelines, and ensuring that financial controllers maintain human-in-the-loop oversight over automated system outputs.

Furthermore, cloud governance and data security have become core operational skills for modern CPAs and controllers. As financial ledgers and client data stream through interconnected cloud ecosystem APIs, accounting teams must implement multi-factor access controls, continuous data encryption, and strict data privacy compliance to protect sensitive financial records from cyber vulnerabilities.

The embedding of AI into enterprise accounting software redefines internal financial controls and career requirements for accounting professionals. Business owners and finance leaders must update governance protocols, invest in staff digital literacy, and ensure accounting systems maintain rigorous audit compliance to capture productivity gains safely.

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Accounting

Mandatory ESG Reporting Standards Demand Standardized Non-Financial Audit Trails

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1 week ago

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September 5, 2026

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Mandatory ESG Reporting Standards Demand Standardized Non-Financial Audit Trails

Corporate accounting departments face an expanded regulatory mandate as mandatory sustainability and Environmental, Social, and Governance (ESG) reporting frameworks take full effect internationally. Governed by the European Union’s Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) IFRS S1 and S2 standards, enterprise financial controllers are now legally required to track, verify, and report non-financial data with the same internal controls and auditability as traditional financial statements.

The expansion shifts ESG compliance

This regulatory expansion shifts ESG compliance from marketing departments to corporate accounting offices. Financial managers are now responsible for gathering, consolidating, and verifying carbon emissions metrics, supply chain labor conditions, water usage, and climate risk exposures across multi-tiered corporate structures. These non-financial metrics must be integrated into standardized general ledgers to withstand rigorous third-party audit assurance processes.

To comply with these rigorous reporting mandates, accounting software providers have added dedicated ESG modules designed to aggregate data from IoT sensors, utility platforms, and vendor management systems. Controllers are implementing internal control frameworks—modeled after traditional COSO frameworks—to ensure the completeness, accuracy, and consistency of sustainability disclosures, protecting organizations against greenwashing penalties and litigation risks.

The transition requires significant cross-functional collaboration between accounting teams, legal counsel, and operational directors. Accounting professionals are expanding their technical expertise beyond financial ledgers to master carbon accounting methodologies, lifecycle assessment standards, and non-financial data governance protocols, fundamentally expanding the role of the modern corporate accountant.

Why This Information Matters
Mandatory ESG disclosures require companies to treat environmental and social metrics as audited financial records. Executives, accountants, and board members must institute formal tracking and assurance processes to satisfy legal mandates, maintain investor confidence, and mitigate regulatory non-compliance risks.

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Accounting

SEC’s Semiannual Reporting Proposal Faces Investor Pushback: What CFOs Need to Know

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3 weeks ago

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August 25, 2026

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U.S. Securities and Exchange Commission (SEC)

A proposal from the U.S. Securities and Exchange Commission to potentially shift some public companies away from quarterly financial reporting toward a semiannual model is drawing significant pushback from investors, even as it continues moving through the regulatory process. The debate has direct implications for corporate finance teams, auditors, and the broader transparency of U.S. capital markets.

What the SEC Proposed

According to a summary published by accounting advisory firm Cohen & Co., the SEC issued a proposed rule on May 19, 2026, aimed at simplifying financial reporting requirements for many U.S. public companies. The proposal would potentially reduce the frequency of certain mandatory disclosures from quarterly to semiannual, a structural change that has not been made to core U.S. reporting requirements in decades.

The proposal follows an extended debate within U.S. policy circles, with proponents arguing that reduced reporting frequency could lower compliance costs and free up management time for longer-term strategic planning rather than quarter-to-quarter results management.

Why Investors Are Pushing Back

Comment letters submitted in response to the proposal have been extensive, and according to Cohen & Co.’s review of the public record, investors “appear to be largely opposed” to the shift, viewing frequent interim reporting as a core benefit of U.S. capital markets relative to other jurisdictions.

Accounting and law firms have taken a more measured position, generally urging any changes to remain aligned with the Financial Accounting Standards Board (FASB), whose existing disclosure requirements and guidance are built around a quarterly reporting cadence. A shift to semiannual reporting without corresponding changes to FASB guidance could create friction between SEC filing requirements and GAAP-based disclosure expectations.

Lessons From the U.K. Experience

The debate is not without precedent. The United Kingdom moved away from mandatory quarterly reporting for listed companies in 2014, returning to a semiannual disclosure requirement. According to Cohen & Co.’s analysis, that experience offers a cautionary data point: there was no measurable increase in capital expenditure or R&D investment following the change, while analyst coverage of affected companies declined as reliable interim information became less available — a particular risk for smaller and newly public companies that rely on analyst coverage to maintain investor visibility.

Practical Implications for Finance Teams

Beyond the debate over disclosure philosophy, the proposal carries practical complications. Many companies have debt covenants and credit agreements structured around quarterly financial delivery; a shift to semiannual reporting could require renegotiating those terms. Reduced reporting frequency would also extend the “window of market silence” between disclosures, a factor that governance and investor-relations teams would need to manage carefully to avoid information asymmetry.

Separately, and unrelated to the reporting-frequency debate, the SEC and FASB have continued finalizing more routine updates this year. New Accounting Standards Updates are taking effect for December 31, 2026, fiscal year-ends covering income tax disclosures, credit loss measurement, induced debt conversions, and stock compensation, according to Eide Bailly’s review of 2026 ASU activity. Additional guidance on paid-in-kind dividends and environmental credits is also on the near-term horizon.

What to Watch Next

The semiannual reporting proposal remains in the comment and review phase, and no final rule has been adopted as of this writing. Finance leaders should monitor the SEC’s regulatory agenda for further movement, while treating the current quarterly reporting requirement as the operative standard until any final rule is issued and an effective date is set.

Given the extent of investor opposition documented in the comment file, a full shift to mandatory semiannual reporting appears more likely to result in either a scaled-back compromise or continued study rather than swift adoption — though the SEC’s ultimate direction remains uncertain.

 

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