Millions of taxpayers could face unexpected delays in receiving their tax refunds beginning this filing season, as the IRS rolls out new procedures tied to its shift away from paper checks and toward mandatory electronic payments.
"The IRS will still process individual income tax returns (Form 1040 series) filed without bank account information," the guidance states. "However, the IRS will temporarily freeze the refund until the taxpayer provides direct deposit information or requests a paper check."
The changes are part of a broader federal effort to modernize payments, reduce fraud, and cut administrative costs. But advocates say taxpayers who are unaware of the new rules could experience weekslong delays if they fail to take simple steps before or after filing.
Treasury checks are 16 times more likely to be stolen, lost, or altered than electronic payments and, once compromised, they can result in a long and stressful process for taxpayers to resolve the problem.
"To avoid refund delays, I strongly encourage taxpayers to provide their direct deposit information on their 2025 tax return or update their direct deposit information through their IRS online account," Collins said in December, while calling on the IRS to communicate the changes to taxpayers and provide them with resources that they will need to comply with the new rules.
"Millions of taxpayers depend on their refunds to meet their basic living expenses, and they should not be surprised by unanticipated delays."
The IRS has outlined specific scenarios in which refunds may be temporarily frozen under the updated rules.
When Refunds May Be Frozen—and What Happens Next
Beginning in 2026, the IRS will continue to accept and process individual income tax returns even if taxpayers do not provide direct deposit information. In those cases, however, the agency will place a temporary hold on the refund rather than automatically issuing a paper check.Refunds may also be frozen when a bank rejects a direct deposit due to incorrect routing numbers, closed accounts, or other verification issues. Under the new system, most rejected deposits will no longer be automatically reissued as paper checks, requiring taxpayers to take action to release the funds.
Some groups are excluded from the freeze rules, including international taxpayers, minors, prisoners, taxpayers with approved religious exceptions, and decedent estates.
What to Do If Your Refund Is Frozen
The CP53E notice instructs taxpayers to update or add direct deposit information through their IRS Online Account. Taxpayers generally have 30 days from the date of the notice to respond.If no action is taken within the 30-day window, the IRS will issue a paper check after six weeks. However, taxpayers are given only one chance to update their banking information.
The CP53E notice includes a toll-free, information-only phone line that provides recorded explanations of the notice and next steps. IRS employees cannot update bank account information over the phone, and taxpayers must use their online account to make changes.
Taxpayers who do not have a bank account or online access must call the IRS’s main customer service number to request that their refund be converted to a paper check, according to the Taxpayer Advocate Service.