Your Tax Refund Could Be Delayed or Frozen Under New IRS Rules

golden dollar sign trapped in a cage — (Image credit: Getty Images)

As the 2026 filing season is now in full swing, some taxpayers may find their refunds temporarily delayed or even frozen due to changes in how the IRS delivers payments.

Under new rules, the tax agency is phasing out paper refund checks. As a result, refunds may be put on hold if a filer's direct deposit information is missing, incomplete, or rejected.

That is notable for a couple of reasons.

Article continues below

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

According to the latest IRS reporting, taxpayers are seeing refunds run about 10% higher on average than this time last year. The average refund amount is just over $3,700, and that's likely due to changes in the Trump/GOP tax and spending bill enacted last year.

And…recent polls suggest that many plan to use that money to pay down debt or cover essentials.

For example, a survey conducted by Atomik Research and commissioned by Metro by T-Mobile finds that 59% of Americans plan to use their tax refund to pay off debt or cover core expenses like rent, utilities, or transportation costs.

So, what's happening with frozen or delayed refunds, and what should you do if you receive a letter from the IRS about it? Read on to learn more.

IRS is sending direct deposit letters to some taxpayers

As Kiplinger has reported, the federal government, including the IRS, is moving away from paper checks as part of an initiative to modernize payment systems.

Data show that paper refund checks are more prone to loss, theft, or mail delays, while electronic deposits provide faster, safer, and more efficient transfer.

As a result, taxpayers who don't provide valid direct deposit information or whose banks reject the deposit may receive a formal notice instructing them to update their banking details.

These CP53E notices are part of the new verification process to help ensure that refunds are credited to the correct accounts.

The IRS says that when you receive the CP53E notice, you have 30 days to update or add a new bank account.
When you do, you should receive a message indicating your bank account update was successful.
If you don't respond to the letter, the agency says it will issue a paper check after 6 weeks.

However, the Taxpayer Advocate Service (TAS) has indicated that taxpayers should take the notices seriously and respond promptly to avoid unnecessary delays.

Why are IRS refunds being delayed?

The IRS may temporarily hold your refund if the agency cannot successfully process a direct deposit. This can happen when:

The taxpayer didn't provide direct deposit information when filing
The bank rejects the deposit due to an incorrect routing or account number

In any case, the IRS will issue a letter asking you to update your direct deposit information through your IRS online account.

Though, as mentioned, you usually have 30 days to respond. And yes, if you fail to respond, the IRS may eventually issue a paper check, but the process can take additional weeks.

Who's impacted by the direct deposit change?

Most taxpayers won't see major delays. The IRS reports that roughly 36.5 million refunds have already been processed so far this tax season.

However, certain people are more likely to be affected, including:

Taxpayers who historically relied on paper checks
Individuals who don't have a bank account or have left the direct deposit section blank
Those who entered incorrect banking information on their returns

Also worth noting: Some taxpayers remain exempt from the electronic requirement, like certain international filers, minors, incarcerated individuals, and decedents’ estates.

IRS direct deposit letter: Bottom line

Larger tax refunds for some so far this year reflect the 2025 Trump/GOP tax legislation, which expanded deductions and other benefits for many taxpayers. While those changes are welcome news for some households, new IRS direct deposit rules and verification letters can be confusing.

Keep in mind that the IRS will only request banking information via official letters mailed, not by phone, text, or email.

If you receive a letter, update your direct deposit information through their IRS Online Account as instructed to get your refund as quickly as possible.

If you haven't filed yet, double-checking routing and account numbers before submitting your return can help prevent errors and processing delays.

TOPICS

Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.