International Clients Need International Solutions

Christian Ross | Ross Title – Ross Law

What the End of IRS Paper Refunds Could Mean for International Taxpayers
Effective September 30, 2025, the Internal Revenue Service (IRS) officially started the phasing out of paper refund checks, in accordance with Executive Order 14247. While this transition to digital refunds aims to modernize and streamline refund processing, it presents unique challenges for international taxpayers – especially those without access to U.S. banking infrastructure.

Why This Matters for International Taxpayers

• The IRS will now issue refunds only via direct deposit to a U.S. bank account or U.S.-affiliated financial institution in the taxpayer’s name. Critically:
• The IRS does not remit refunds via international wire transfer.
• Due to U.S. Patriot Act regulations, many non-resident individuals and entities cannot open conventional U.S. bank accounts.

This creates a potential bottleneck for accessing legitimate tax refunds, including those related to real estate transactions, estate distributions, and retirement account withdrawals.

One particularly impacted group: foreign sellers of U.S. real property. Under the Foreign Investment in Real Property Tax Act (FIRPTA), buyers are generally required to withhold 15 per cent of the gross sales price when purchasing U.S. real estate from a foreign person or entity. The seller may later claim a refund of any excess withholding – a process that, until now, involved the IRS mailing paper checks internationally. This method will potentially no longer be viable under the new mandate.

A Practical Solution: U.S.-Based Virtual Bank Accounts

To help address these challenges, some fintech providers – in partnership with traditional U.S. banks – are offering compliant virtual bank accounts tailored to the needs of foreign individuals and entities.

One leading provider is Currencies Direct, a global leader in cross-border payments and foreign exchange (FX) solutions, backed by Blackstone. Through its banking relationships with J.P. Morgan and Cross River Bank, Currencies Direct enables eligible international taxpayers to open U.S.-based accounts without requiring U.S. residency or physical presence.

These accounts are proving to be an invaluable solution for clients facing refund accessibility issues.

Key Benefits:

• Direct Receipt of IRS Refunds: Accounts are opened in the name of the taxpayer (individual, trust, estate, or entity), allowing for compliant direct deposit of IRS refunds.
• Check Deposit Support: Existing or legacy USD checks (issued before the mandate comes into effect) can also be deposited into these accounts.
• Global Transfer & Currency Conversion: Funds can be repatriated to over 120 countries and converted into local currency at market-leading FX rates.
• Concierge Service: Clients benefit from access to a dedicated Account Manager / FX Specialist to assist with timing strategies, hedging instruments (e.g., forward contracts, limit orders), and transaction planning.
• Expedited Account Setup: In most cases, personal or entity accounts can be opened in under 48 hours, with only basic KYC documentation (e.g., proof of ID and address).

Who Stands to Benefit

These accounts are particularly relevant for:

• Foreign sellers of U.S. real estate (FIRPTA-related refunds)
• Non-resident beneficiaries of U.S. estates or trusts
• Foreign individuals receiving 401(k) or pension distributions
• Global investors with recurring U.S. income or tax interactions

For high-net-worth individuals, international estates, and multi-jurisdictional tax structures, these accounts offer a streamlined and fully compliant solution for managing U.S.-sourced proceeds.

Next Steps

With the new changes, international taxpayers should:

1. Consult their tax advisor to assess the impact of this regulatory change on current or pending refund claims.
2. Establish a compliant direct deposit account to ensure IRS refunds can be processed without delay or disruption.