IRS Refund Changes: What to Know as Paper Checks are Phased Out

The IRS is shifting away from paper checks—and the change may affect how you receive your tax refund in the coming years. If you typically receive a paper refund check, or if you’ve had issues with direct deposit in the past, these updates are worth understanding now to avoid surprises later.

Beginning with 2026 refunds (claimed on 2025 tax returns), the IRS will apply new procedures when direct deposit information is missing or cannot be used. These changes are part of a broader effort to modernize how payments move between taxpayers and the IRS.

Below is an overview of what’s changing and what you can do to prevent delays.

New Refund Rules Starting in 2026

Under the new rules, refunds may be temporarily frozen if direct deposit information is not provided or if a deposit attempt is rejected.

Returns Filed Without Direct Deposit Information

The IRS will process individual income tax returns (Form 1040) that do not include bank account details. However, the refund itself will be placed on hold until the taxpayer either provides direct deposit information or specifically requests a paper check.

Rejected Direct Deposits

If a bank rejects a direct deposit, the IRS will generally freeze the refund rather than automatically reissuing it as a paper check. While a small number of reject codes are excluded, most rejected deposits will require action from the taxpayer before the refund is released.

Who is Not Affected

These rules do not apply to:

• International taxpayers

• Minors

• Incarcerated persons

• Taxpayers with qualifying religious exceptions

• Decedent taxpayers

What Happens If Your Refund is Frozen

When a refund is frozen, the IRS will issue a CP53E notice explaining the next steps.

• The notice instructs you to add or update direct deposit information through your IRS Online Account.

• You generally have 30 days to respond.

• If no action is taken, the IRS will issue a paper check after approximately six weeks.

It’s important to note that the CP53E notice is issued only once. If a second direct deposit attempt is rejected, the IRS will not provide another opportunity to update banking information.

How to Update Direct Deposit Information

Taxpayers can take action through their IRS Online Account by:

• Entering new or corrected bank account information for direct deposit, or

• Requesting a waiver to receive a paper check if direct deposit is not an option.

Once the IRS verifies updated banking details, the refund will be issued by direct deposit.

Help by Phone

The CP53E notice includes a toll-free, information-only phone line at 866-325-4066. This line provides recorded explanations of the notice and next steps but does not connect callers to a representative or allow changes to deposit information.

Taxpayers who do not have a bank account or an IRS Online Account will need to call the main IRS number (800-829-1040) and request assistance from a Customer Service Representative to switch the refund to a paper check.

How to Avoid Refund Delays

To ensure timely delivery of your refund:

• Double-check routing and account numbers before filing

• Use direct deposit whenever possible

• Set up and maintain access to your IRS Online Account so you can respond quickly if action is required

For general IRS guidance on these updates, visit IRS.gov/modernpayments.

If you have questions about these changes, need help setting up an IRS Online Account, need help responding to an IRS notice, or want to make sure your return is filed in a way that minimizes delays, our team is here to help. We’re happy to walk through your options and make the process as smooth as possible.