Taxpayers may be in for a big surprise this filing season as guidelines and policy changes surrounding the annual tax filing process shift from last year’s procedures.
One of those major changes is the Internal Revenue Service’s move to phase out paper checks— a step that could result in refunds being frozen and delayed for weeks.
Why refunds could be frozen
The IRS and U.S. Treasury Department are modernizing federal payments and making direct deposit the default method for refunds.
Taxpayers who don’t provide bank account and routing numbers when filing will no longer automatically receive a refund, as paper checks are being phased out, the IRS warns.
If direct deposit information is missing or rejected by a filer’s bank, the IRS will temporarily freeze refunds.
In past years, the agency would automatically issue a paper check in these cases. However, since phasing out paper checks, the agency will not do that this year.
How the delay works
When a refund is frozen, the IRS sends out what’s known as a CP53E notice explaining the issue and gives taxpayers 30 days to provide valid bank information online via their IRS account.
If taxpayers fail to respond within that 30-day window, the IRS will issue a paper check, but only after about six weeks from the notice date.
That means taxpayers who don’t act promptly could see refund delays stretch into late spring or beyond, the IRS warns.
What taxpayers should do
To avoid weeks of delay, the IRS suggests taxpayers:
- Set up direct deposit by providing their bank account and routing numbers before filing.
- Check their IRS account regularly after filing to ensure no CP53E notice has been issued.
- Respond promptly if a CP53E notice arrives. Failure to act triggers paper check issuance with a multi-week delay.
