The IRS Is Phasing Out Paper Checks: What Taxpayers Need to Know

Paper checks are on their way out. A March 2025 executive order, Executive Order 14247, Modernizing Payments To and From America's Bank Account, requires all federal payments and receipts to be made electronically. The 2026 filing season was the first in which taxpayers felt the change. If you are still counting on a check in the mail, here's how to avoid delays next year.

 

Most tax activity is already electronic

 

The shift is less dramatic than it sounds. In Processing Years 2024 and 2025, 88% of transactions were already electronic. Among individuals, 81% of payments and 85% of refunds were electronic. Businesses paid electronically 97% of the time.

 

What happened in the 2026 filing season

 

Starting in January 2026, the IRS sent Notice CP53E to taxpayers expecting refunds who filed without direct deposit information. About 4.2 million notices went out. The notice warned that the refund could be held if bank account information was not provided within 30 days. If no information was provided, the IRS issued a paper check after six weeks.

The results were clear:

 

• Paper check refunds fell by more than 80%.
• The average time to issue a paper refund nearly tripled, from 13 days in 2025 to 36 days in 2026.
• Nine out of 10 direct deposit refunds were issued within 21 days.

 

The lesson is simple: direct deposit is now much faster than waiting for a check.

 

If you get a CP53E notice

 

If you receive a CP53E, the quickest fix is your IRS online account. There you can add a bank account or select one of a limited number of exception conditions that allow a paper check. The IRS releases the refund as soon as it has your information.

Many recipients found the notices confusing. After the AICPA raised concerns that the notices lacked context, the IRS said the next batch would be revamped to explain more about what happened. If a notice is unexpected, you can review your IRS transcript online through your IRS online account, or call the IRS, to see whether an adjustment created the refund.

 

Exceptions: who can still get paper

 

The executive order recognizes that electronic payment doesn't work for everyone. It provides limited exceptions for:

 

• People without access to banking services or electronic payment systems.
• Emergencies where an electronic payment would cause undue hardship.
• Certain national security or law enforcement activities.
• Other circumstances set by the Secretary of the Treasury.

 

The IRS describes these exceptions as covering situations such as hardships and certain legal and procedural requirements.

Before you claim the "no bank account" exception, know that a traditional bank account isn't the only electronic option. The IRS can deposit a refund to a payment app, a prepaid debit card, or a digital wallet, as long as it has an account and routing number. It can also deposit to an IRA.

How to ask for an exception. You can't claim an exception on the return yet. You request the exception after filing, when the IRS asks for your bank information (Notice CP53E). The letter explains the exceptions and gives a dedicated phone line for requesting a paper check. You can also select an exception condition in your IRS online account. The AICPA has asked the IRS to let qualifying taxpayers claim an exception right on the return, so they don't have to wait for a notice.

Other cases. The IRS hasn't changed how it issues refunds to deceased taxpayers, so checks continue under current practice for now.

 

Paying the IRS: electronic is now the expectation

 

For now, the IRS still accepts payments by check, and money order. The IRS strongly encourages electronic payment. Mailed checks take longer to post and are more exposed to mail theft and check fraud.

The IRS already offers several electronic options:

 

• IRS Direct Pay. Free payments from a checking or savings account, with no registration required. Payments can be scheduled up to 365 days in advance, one at a time, and each must be under $10 million.
• IRS online account. Make and schedule payments, see your balance, and confirm that past payments posted.
• EFTPS (Electronic Federal Tax Payment System). A free Treasury system and the standard way businesses make federal tax deposits, such as payroll taxes. Enrollment requires a PIN that arrives by mail in five to seven business days, so allow extra time. EFTPS is no longer accepting new enrollments from individual taxpayers, who should use their online account or Direct Pay instead.
• Electronic funds withdrawal. Pay a balance due directly from your bank account when you e-file your return.
• Debit card, credit card, or digital wallet. Available through IRS-approved payment processors, which charge a processing fee.
• Same-day wire. Arranged through your bank for time-sensitive payments. Your bank may charge a fee.

 

If you make quarterly estimated tax payments or file extensions, now is a good time to move those payments online. Direct Pay schedules one payment at a time and only up to 365 days ahead, so schedule each 2027 estimate once its due date falls inside that window. Current EFTPS users can schedule several estimates at once. Either way, paying online removes the risk of a check lost in the mail.

 

States are going electronic too

 

The push away from paper isn't only federal. Many states already require electronic payment once tax payments reach a certain size, and the thresholds vary widely:

 

• Pennsylvania has two thresholds. Personal income tax payments of $15,000 or more must be made electronically. That covers payments by individuals, estates and trusts, and pass-through entity nonresident withholding. Business tax payments of $1,000 or more must also be made electronically. That covers sales and use tax, employer withholding, corporate net income tax and other business taxes. In both cases, a payment that isn't made electronically can draw a penalty of 3% of the payment, up to $500.
• New Jersey requires a taxpayer to pay all of its taxes by electronic funds transfer once its prior-year liability for any single tax reached $10,000 or more. Transfer inheritance, estate, and gross income taxes don't count toward the threshold. E-check and credit card payments satisfy the requirement.
• Delaware requires employers that must deposit federal employment taxes electronically to pay Delaware withholding by electronic funds transfer as well, starting one year after the federal requirement began. Employers who don't comply face a penalty of the lesser of 5% of the payment or $500. Monthly and eighth-monthly withholding returns must also be filed electronically.
• Maryland requires payment in immediately available funds, such as an electronic transfer, when an unpaid liability of $10,000 or more is due for a covered tax. Covered taxes include employer withholding, corporate income tax, sales and use tax, and certain fuel and motor carrier taxes. The rule applies to all taxpayers, including partnerships and fiduciaries.
• New York requires its largest withholding tax filers, and sales tax vendors with $500,000 or more in annual sales tax liability, to pay through its PrompTax electronic payment program. The Tax Department notifies employers who must participate. Separately, employers who prepare their own withholding returns on a computer without a tax professional, and who have broadband internet access, must e-file and pay those returns electronically. The annual Form IT-204-LL filing fee for partnerships, LLCs, and LLPs follows the same pattern: when the form is e-filed, the fee can only be paid by a debit from the entity's bank account, set up as part of the filing. There is no payment voucher option.

 

If you pay tax in more than one state, check each state's rules. A payment that is fine by check in one state may draw a penalty in another.

How to prepare for the 2027 filing season

 

1. Include direct deposit information on your return. It is the fastest way to get your refund and avoids a CP53E hold.
2. Set up or check your IRS online account. It is the channel for fixing a held refund.
3. Pay electronically and carefully. Options include IRS Direct Pay, debit or credit card, electronic funds withdrawal, EFTPS, and same-day wire. Check every identifying detail.
4. Know whether you qualify for an exception. If you can't use any electronic option, watch your mail for Notice CP53E and respond within the 30-day window. We can help.

 

Paper is not disappearing overnight, but the IRS has made its direction clear. Taxpayers who switch to electronic now will get refunds faster and run into fewer surprises.