IRS Fact Sheet on Use of Checks
As discussed on pages 79 to 81 of the Tax Year 2025 M+O=CPE Individual Tax Reference Book, the IRS announced that it is phasing out paper tax refund checks and the use of checks to pay tax balances due.
The IRS recently issued a fact sheet that provides more details about this phaseout (https://www.irs.gov/pub/taxpros/fs-2026-02.pdf).
Refunds: In the fact sheet, the IRS indicates that when taxpayers do not include direct deposit information for their refunds on their returns, the IRS will send letters to such taxpayers using their last-known address on record, asking them to provide their banking information.
The IRS indicates it will send a CP53E notice in the mail requesting a response within 30 days, either to provide banking information or to explain why such information cannot be provided. The IRS also indicates that its “Where’s My Refund?” tool on its website will also indicate that the taxpayer needs to provide banking information.
Taxpayers will be able to respond to the letter, or use an IRS online account to provide banking information, but they will not be allowed to provide such information to an IRS employee over the phone or in person.
The fact sheet indicates that, once the taxpayer provides the direct deposit information or exception, the refund will be immediately released via direct deposit or paper check. If there is no response to the notice and there are no other issues with the tax return, the refund will be released as a paper check after six weeks.
Separately, the fact sheet indicates that, for now, it will continue to issue refunds by check for deceased taxpayers.
Payments Due to the IRS: The fact sheet indicates that, for now, the IRS will continue to accept payments by check, but it emphasizes that it encourages taxpayers to pay using electronic means.
However, the fact sheet also indicates that, over time, the IRS will reduce reliance on paper checks for receiving payments, with limited exceptions made for specific situations such as those involving hardships, and/or legal and procedural requirements. The fact sheet does not provide a specific timetable for this change.
Strategies for This Tax Season: Practitioners should recommend the use of direct deposit for refunds. If the client is unable or unwilling to provide direct deposit information, the practitioner should warn the client that this will, most likely, result in a delay of the refund while the IRS sends a letter requesting the information and/or reason it is not provided.
Likewise, practitioners should recommend the use of a bank debit for the payment of balances due. If a client is unable or unwilling to pay by bank debit, the practitioner should warn the client that it is unknown how long the ability to pay by check will last. If the IRS changes the policy in the middle of 2026, that could affect the ability of clients to make estimated tax payments by check.