IRS Releases FAQ on Paper Check Phase-OutWhat Taxpayers Need to Know

2/4/2026 - By David Uslan, CPA

The IRS just released a new FAQ clarifying how it will move away from paper checks for tax refunds and payments. The guidance outlines how taxpayers will receive refunds and make payments electronically, including options for those without traditional bank accounts, such as prepaid debit cards or certain mobile payment methods. While filing a tax return isn’t changing, providing electronic payment information will help avoid delays and additional IRS notices.

The FAQ also explains what happens if banking information is missing, how taxpayers will be notified, and what steps to take to ensure timely processing. This is an important update for anyone expecting a refund or making tax payments in the upcoming filing season, and it highlights the IRS’s push for faster, more secure, and reliable payment methods.

Below are a few Q & A’s from the IRS fact sheet, Questions and Answers about Executive Order 14247: Modernizing Payments To and From America’s Bank Account, outlining how the IRS is transitioning to electronic payments for refunds and tax payments.

Topic A: Individual Refunds and Disbursements 

What will happen if taxpayers do not include direct deposit information on tax returns? (added Jan. 27, 2026) 

Providing electronic payment information is voluntary. If taxpayers do not provide this information and no exception applies, their refunds could take longer to process. Taxpayers should provide direct deposit information when filing a tax return. If banking information is missing when filing a tax return, the tax return will still be accepted and processed. However, when filing electronically, the taxpayer may receive an alert notifying them of the missing banking information and outlining the next steps if they are due a refund. 

For all taxpayers with missing information, the IRS will send letters to individuals using their last-known address on record, asking them to update their banking information if they did not provide it on their tax return, or if their financial institution rejected the direct deposit. 

The taxpayer will then receive 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. Additionally, the Where’s My Refund? tool on IRS.gov will provide messaging related to the need for banking information. The taxpayer will be able to use the IRS Individual Online Account to provide this information. For security reasons, IRS employees cannot take direct deposit information over the phone or in person. 

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. 

Will the IRS contact taxpayers by phone or text to request banking information if a taxpayer did not provide it when they filed their tax return? (added Jan. 27, 2026) 

No, the IRS will only contact taxpayers by sending a letter through the U.S. mail for this purpose, using the taxpayer’s last-known address. 

Topic B: Payments to the IRS 

How much longer will taxpayers be able to pay the IRS by check or money order? (added Jan. 27, 2026) 

For now, mailed payments to the IRS, including cash, checks and money orders, will still be accepted and processed. However, over time, the IRS will fully transition to electronic methods. The IRS will accept checks when electronic payment methods are not available for a certain transaction type or in specific situations such as those involving hardships, and/or legal and procedural requirements. 

What other payment options are available? (added Jan. 27, 2026) 

The IRS is expanding its digital payment system capabilities to make it easier for taxpayers to pay electronically. Currently, payment options available for taxpayers and third parties for many transaction types include debit/credit card or digital wallet, IRS Direct Pay (direct from a bank account with no fee), IRS Individual Online Account, IRS Business Tax Account, or Electronic Federal Tax Payment System (EFTPS). EFTPS payment options will be sunset for individual taxpayers in late 2026. Depending on the payment method, processing fees may apply. 

Not all transaction types are eligible for digital payment options. Taxpayers should review the correspondence they received and visit the Payment options page on IRS.gov to determine which digital payment methods are available for their specific situation. 

Additional Insights

The era of "the check is in the mail" is officially coming to a close. As the IRS accelerates its digital transformation, both individuals and businesses must adapt quickly to avoid significant refund delays.

To help you get ahead of the curve, we’ve outlined the practical steps and potential pitfalls in our latest guide, The End of Paper Refund Checks: Are You Ready for the IRS Digital Shift? Transitioning to a digital-first tax season shouldn’t be a headache. Our tax team specializes in navigating these evolving electronic requirements, ensuring your filings remain compliant and your payments arrive on time. Whether you’re managing personal finances or complex business overhead, our professionals are here to help in the process and eliminate the guesswork.

About the Author | David Uslan, CPA

David is a partner  and tax technical leader with experience across tax, accounting, and advisory services at Saltmarsh. He began his career in public accounting over 30 years ago, focusing on serving high-net-worth individuals and growth-oriented companies. His primary areas of experience include providing tax and advisory services to clients in trust and estate, real estate, professional services, technology, and creative services industries.

 

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