More than 830,000 taxpayers are facing possible refund delays this filing season as the Internal Revenue Service pushes filers away from paper checks and toward direct deposit, a transition that is arriving just as average refunds rise sharply. IRS data for the week ending Feb. 27 show the average refund climbed to $3,742, up from $3,382 a year earlier, while total refunds issued reached $136.6 billion to 36.5 million taxpayers.
The disruption centers on the IRS's CP53E notice, a letter sent to taxpayers whose refund cannot be issued electronically under the agency's new payment rules. The notice tells filers they must log in to their IRS online account within 30 days and provide valid banking information if they want their refund by direct deposit. If they do not respond, the IRS says it will issue a paper check after six weeks.
House Ways and Means Committee Democrats said in a March 9 letter to Treasury Secretary Scott Bessent that more than 830,000 such notices had been sent, raising concerns that taxpayers who requested paper checks are being pushed into a slower and more confusing process. Reps. Danny Davis and Terri Sewell wrote that there is "no simple process" for affected taxpayers to obtain an immediate paper refund without waiting at least 10 weeks.
The shift stems from the federal government's move to modernize payments. In guidance on Executive Order 14247, the IRS said it began phasing out paper tax refund checks and other disbursements on Sept. 30, 2025, part of a broader Treasury effort to reduce fraud, lower processing costs and speed payments.
For most taxpayers, the new system will barely register. The IRS says direct deposit already dominates refund delivery. During the 2025 filing season, about 94% of individual taxpayers who received refunds used direct deposit, according to reporting citing IRS and taxpayer advocate data. But the remaining group is not trivial: the National Taxpayer Advocate has estimated that more than 10 million taxpayers previously received refunds by paper check.
That population includes taxpayers who may have practical reasons for avoiding direct deposit. National Taxpayer Advocate Erin Collins warned that some filers rely on paper checks because of "systemic, geographic or religious factors," including unbanked households, Americans living abroad, abuse survivors and some people with disabilities.
The rules are also rigid. IRS guidance says taxpayers cannot fix the issue by calling the agency; banking details can only be updated through an IRS online account. The agency also warns taxpayers they get only one chance to enter account information correctly. If a bank rejects the deposit because of an error, the IRS will revert to a paper check.
The bigger irony is that the delays are arriving during a year of larger refunds. IRS filing-season statistics show both the average refund and total refund volume are running well ahead of last year's pace. That means the payment bottleneck is surfacing not during a weak refund season, but during one in which many households may be counting on a larger check.
