Congressional Democrats are raising questions about IRS notices being sent to hundreds of thousands of taxpayers whose refunds have been delayed because the agency is moving away from issuing paper checks.

During a House Ways and Means Committee hearing earlier this month, ranking member Rep. Richard Neal (D-Mass.) criticized the notices in his opening remarks, saying more than half a million taxpayers had their refunds delayed and were receiving an unspecified letter that Treasury had not provided to the committee. “The over half a million people who have had their refunds delayed by the president are instead receiving an unknown ‘letter’ that Treasury refused to provide to this committee,” Neal said.

The letter Neal referenced is a CP53E notice, which the IRS sends to taxpayers when it cannot process a refund through direct deposit into a bank account. The notice is tied to a broader change in how the IRS handles refunds when direct deposit information is missing or rejected.

The IRS has not publicly released the CP53E notice referenced by lawmakers and has not responded to a request for comment.

According to agency guidance, the notice is sent when the IRS cannot process a refund through direct deposit and asks taxpayers to update their banking information. The notice appears to be closely related to the IRS’s longstanding CP53A notice, which is issued when a bank rejects a direct-deposit refund and the agency converts the payment to a paper check.

The Taxpayer Advocate Service (TAS) notes that the one-page notice explains that the IRS couldn’t process the taxpayer’s refund via direct deposit and instructs them to update their bank account information. Taxpayers can do that through their IRS online account, which the notice links to using both a URL and a QR code.

The IRS does note on its website—through a set of Frequently Asked Questions (FAQs)—that taxpayers who don’t respond will eventually receive a paper check.

However, the notice itself does not clearly highlight that taxpayers who do not respond could face several weeks of additional delay before receiving their refund. According to IRS guidance, taxpayers who do not respond within 30 days will receive a paper check after about six more weeks if there are no other issues with the return.

According to TAS, the IRS now freezes most refunds when direct deposit fails and requires taxpayers to update their banking information before reissuing the refund, rather than automatically issuing a paper check.

If your return is filed without direct deposit information, the IRS will still process the return. However, the IRS will temporarily freeze the refund until you provide direct deposit information; or affirmatively request a paper check (which is not something you can do on your original tax return); or wait for an extended period. (In previous years, if you didn’t provide direct deposit information, the IRS would immediately assume you wanted a paper check and mail one out.)

However, if your return is filed with direct deposit information but the direct deposit is rejected, the IRS will likely freeze your payment and will not automatically reissue it as a paper check. Some reject codes are excluded, but many rejected direct deposits will require you to take action. If you don’t, it is not clear how long you might have to wait.

Not all taxpayers are affected by the change. According to TAS, the refund-freeze policy does not apply to certain groups, including international taxpayers, minors, incarcerated individuals, taxpayers with religious objections to electronic payment systems, and decedent accounts.

What Taxpayers Should Do

If your refund is frozen, you generally have 30 days to update your banking information through your IRS online account. If you don’t take action, the IRS will generally issue the refund by paper check after about six weeks, unless there’s a reason to hold it for longer.

Here’s the key: If you do not have a bank account or an online account, you will need to call the main IRS phone number (800-829-1040) and ask the Customer Service Representative to change your refund to a paper check.

Incredibly, the phone number on the notice (866-325-4066) connects only to an automated informational message, not to a live representative or another IRS customer service line. The line provides recorded explanations of the notice but does not allow taxpayers to update banking information or request changes to their refund.

Importantly, you need to act quickly and make sure that you’ve included the right information. The CP53E notice is only issued once. If a second direct deposit is rejected, you will not get another opportunity to update your bank information.

Lawmakers Seek More Information

Days after the hearing referencing the notice, two Democratic committee members requested more information. In a March 9 letter to IRS Acting Commissioner Scott Bessent, Reps. Danny K. Davis (D-Ill.) and Terri Sewell (D-Ala.), who are ranking members of two Ways and Means subcommittees, stated that the IRS had already sent approximately 530,000 CP53E notices and planned to send another 300,000, potentially impacting more than 830,000 taxpayers during this filing season.

The lawmakers warned that taxpayers who ultimately receive refunds by paper check could face delays of more than 10 weeks once the notice’s 30-day response window and additional processing time are considered.

They also questioned whether taxpayers without IRS online accounts have a clear way to request a paper refund and asked whether the IRS will pay interest on refunds delayed by the policy.

The lawmakers asked the agency to provide additional information about the notices and their impact on taxpayers by March 23.

Representatives Davis and Sewell did not respond to a request for comment.

The Policy Behind the Change

The notices stem from a broader shift in how the federal government handles payments. Under Executive Order 14247, federal agencies were directed to phase out paper checks in favor of electronic payment methods such as direct deposit, prepaid debit cards, or other digital options. Treasury officials have said electronic payments are faster, more secure, and less expensive to process than paper checks.

The policy applies not only to payments issued by the government, such as tax refunds, but also to payments made to the government, including taxes. For now, however, you can still pay your taxes by check.

The IRS began phasing out paper refund checks effective September 30, 2025, but the current filing season marks the agency’s first major effort to encourage taxpayers to switch to electronic refunds.

Concerns About The Transition

Advocates for taxpayers argue that the change could unfairly affect individuals who rely on paper refunds. In her most recent report to Congress, National Taxpayer Erin Collins said the transition away from paper payments is expected to affect unbanked and underbanked taxpayers, as well as elderly, disabled, and other vulnerable taxpayers who may rely on paper checks to receive refunds needed to cover basic living expenses.

As the IRS continues rolling out the policy during the current filing season, if you’re expecting a refund, you may want to double-check your banking information and watch for IRS correspondence. If the IRS cannot process your tax refund through direct deposit, responding quickly to a CP53E notice could help avoid additional delays.

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