IRS Paper Check Phase-Out Leaves Thousands of Taxpayers Waiting on Refunds
This tax season, while many Americans are celebrating larger refunds, a significant group is facing unexpected delays. Over 830,000 taxpayers have received a CP53E notice from the IRS, flagging that their refund is on hold because they requested payment by paper check—a method the agency is actively phasing out.
The notice, which gives filers 30 days to provide direct deposit information through an IRS online account, has sparked concern from lawmakers. House Ways and Means Committee Democrats recently wrote to Treasury Secretary Scott Bessent, questioning the process. They noted that after reviewing the notice and calling IRS phone lines, there is no simple way for these taxpayers to request an immediate paper check release; the wait can stretch to at least 10 weeks.
The Policy Behind the Delay: A Shift to Electronic Payments
The root of this issue traces back to an executive order signed by President Donald Trump in March 2025, which mandated federal agencies to transition from paper to electronic payments. The IRS announced its plan to phase out paper refund checks in September, urging filers to prepare for the change.
During the 2025 filing season, about 94% of individual taxpayers opted for direct deposit, according to the National Taxpayer Advocate. That still leaves an estimated 10 million filers who traditionally receive paper checks. As IRS data and advocacy reports highlight, this group often includes vulnerable populations.
Who Is Most Affected by the CP53E Notice?
National Taxpayer Advocate Erin Collins has pointed out that many paper-check recipients do so due to “systemic, geographic or religious factors.” This can include:
- Households without bank accounts (the “unbanked”)
- Americans living abroad
- Individuals with religious objections to electronic banking
- Victims of domestic abuse or people with disabilities who may use paper checks for safety or accessibility reasons
Tax professionals like Josh Youngblood, an enrolled agent and owner of The Youngblood Group in Dallas, note that some clients simply do not want to share banking details with the IRS, viewing the policy change as punitive toward that choice.
What to Do If You Receive a CP53E Notice
If you are due a refund and did not include direct deposit information on your return, expect this notice. Critically, the IRS states the only way to resolve it is by logging into your own IRS Online Account—tax preparers cannot submit the information on your behalf, even with a power of attorney.
Here are the key steps:
- Do not call the IRS. Phone agents cannot process the banking update for these notices.
- Log in to your IRS Online Account at IRS.gov to securely enter your bank routing and account numbers.
- Double-check all information for accuracy. An error will cause the bank to reject the deposit, and the IRS will then issue a paper check, restarting the delay cycle.
- Monitor your account. The IRS says updated refund details should appear online within two to five days. You can also use the “Where’s My Refund?” tool for status updates.
After providing correct information, the agency states it will issue the refund via direct deposit within six weeks of the notice date.
Balancing Efficiency with Accessibility
The IRS’s push for electronic payments aligns with broader government efficiency goals, reducing processing costs and the risk of stolen or lost checks. However, the rollout has highlighted a persistent gap: the transition assumes universal access to and comfort with banking technology.
For now, taxpayers caught in this shift must navigate a digital-only solution to access a refund they are owed. The situation underscores the importance of understanding new procedural requirements and the limitations of traditional customer service channels when dealing with federal agencies in transition.
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