Paperless IRS refunds in 2026: How Executive Order 14247 works
Executive Order 14247 (signed March 25, 2025) directed the Treasury to stop issuing paper checks for federal disbursements (including IRS refunds) effective September 30, 2025, to the extent permitted by law. Treasury and the IRS began phasing out paper refund checks on September 30, 2025; as a result, the 2026 filing season (processing 2025 returns) is the first filing season where most individual refunds are expected to be delivered electronically – though taxpayers who did not provide bank account information and did not respond to Notice CP53E will still receive a paper check.
This shift has significant implications for US taxpayers and tax professionals. In this article, we'll walk through the details of Executive Order 14247, including its key provisions, exceptions, and what it means for tax professionals and accounting firms.
Key provisions of the executive order
The primary objective of the executive order is to eliminate paper-based payments, transitioning them to electronic methods. The move aims to improve payment security, reduce inefficiencies, and save operational costs. It also modernizes payments made to the federal government by replacing outdated systems with digital processes.
Electronic payment is mandatory
Effective September 30, 2025, Treasury is directed to cease issuing paper checks for federal disbursements to the extent permitted by law, with limited exceptions where electronic methods are not feasible.
Treasury's electronic options include direct deposit, prepaid card accounts, debit/credit cards, and other digital payment options (including certain mobile apps and prepaid debit cards for eligible taxpayers).
The executive order also covers payments to the federal government. For now, the IRS still accepts checks and money orders for many transactions, but it is expanding electronic options and reducing reliance on mailed payments over time, with limited exceptions for hardship, legal, or procedural needs.
What changes for the 2026 filing season
- Direct deposit default: The IRS now requires taxpayers to provide routing and account numbers for direct deposit to receive tax refunds.
- Frozen refunds for missing info: If a 2025 return is filed without bank account information, the IRS will not immediately send a check. Instead, it will freeze the refund and mail Notice CP53E to the taxpayer requesting electronic payment information.
- CP53E notice (30–day window): IRS will mail Notice CP53E asking you to add or update direct deposit info (or explain why you can't).
- Delayed paper checks: If you do not provide banking information within 30 days of receiving the notice, a paper check will eventually be issued, but it will be delayed by approximately six weeks.
- Rejected deposits: If a direct deposit is rejected by a bank, the IRS will, in most cases, not automatically reissue a paper check. The IRS will mail a letter or CP53E asking you to update details; IRS employees can't take bank info by phone.
Exceptions to the rule
While the order emphasizes the shift to digital payments, it acknowledges situations where exceptions might apply. Exceptions may apply where electronic methods are not feasible, including:
- People without access to banking or electronic payment systems
- Certain emergency payments where electronic delivery would cause undue hardship
- National security or law enforcement needs
- Individuals with religious objections to electronic systems (may be considered under hardship or other circumstances, unless Treasury or IRS publishes it explicitly)
- Other circumstances Treasury specifies in guidance
Where an exception applies, alternative payment options will be provided. For those without bank accounts, the IRS suggests using prepaid debit cards or digital wallets that provide routing and account numbers.
Impact on Tax Payments (Money owed to the IRS)
Refunds aren't the only thing going digital. Treasury and the IRS are also reducing reliance on mailed paper checks for payments made to the IRS. As of early 2026, the IRS continues to accept checks for many payments, but encourages taxpayers to use electronic options where possible.
The most common electronic payment options for individuals include:
- IRS Direct Pay – pay directly from your checking or savings account
- IRS Online Account – manage payments and view your tax records
- Debit or credit card (through approved payment processors)
- Electronic Funds Withdrawal when e-filing
EFTPS update: New individual enrollments for EFTPS ended on October 17, 2025; individuals are directed to use IRS Direct Pay or their IRS Online Account.
Summary of action required (2026 filing season)
The key takeaways for taxpayers:
- Use direct deposit when filing 2025 returns to avoid refund holds and delays.
- If the IRS needs bank info (e.g., missing or invalid details), it will request it by official US mail (e.g., CP53E) – not by phone or text.
- If a deposit is rejected, follow the IRS letter instructions to update your details.
Advantages of electronic payments
The shift to electronic payments has several advantages, including:
- Enhanced security: Electronic payments are far less likely to be lost, stolen, or altered. According to a White House fact sheet, Treasury checks are 16 times more likely to face issues than electronic payments and expose recipients to fraud and improper payments.
- Cost savings: The federal government spent over $657 million in FY 2024 to maintain paper-based payment infrastructure. The executive order aims to significantly reduce these costs by eliminating paper check processing and outdated physical lockbox services.
Where does the federal government still issue paper checks?
The 2026 rules are broader than the original executive order suggested. Rather than limiting paper checks to exceptional cases, the IRS will now issue them to virtually all taxpayers who did not provide bank account information and did not respond to Notice CP53E.
The unbanked population
The executive order's exception for individuals without banking services (about 4.2% of US households) is significant. The unbanked and underbanked populations are more likely to be impacted by the shift and may need guidance from tax professionals during tax season.
Taxpayers without traditional bank accounts can still receive refunds electronically using certain prepaid debit cards or other approved options. IRS and Treasury point taxpayers to resources for opening low- or no-cost accounts and will publish instructions for alternative electronic options and the exception process.
Professionals will play a key role as they inform federal payment recipients of their options under this new mandate.
How expats can set up a bank account to receive refunds
For US expatriates, setting up proper direct deposit is essential for complying with the new mandate. If you're abroad, plan ahead: ensure your direct deposit details are correct when filing. If you receive a CP53E notice, you generally must update banking info through your IRS Individual Online Account (not by phone). The IRS is also developing and expanding options for international taxpayers over time.
To ensure smooth receipt of tax refunds:
- Choose a bank that accepts US direct deposits: Many US-based banks allow expats to open online accounts with US addresses, allowing for direct deposit of tax refunds.
- Use international banking services: Some international banks offer accounts specifically designed for expats that accept direct deposits from the US. You can also link US accounts with foreign accounts for easy transfer of funds.
- Set up a US address for banking purposes: Some online services, like US-based banks, allow you to set up an account using your US address, even if you're residing abroad. This is especially helpful for those living in countries with limited banking access.
Conclusion
For the 2026 filing season (2025 returns), taxpayers should include valid direct deposit information to avoid refund holds and CP53E notices. If you can't use direct deposit, watch for IRS guidance on alternative electronic options and limited exceptions.
For payments to the IRS, checks are still accepted for now, but the IRS is expanding electronic tools. New EFTPS enrollments for individuals ended October 17, 2025, and individuals will transition away from EFTPS later in 2026.
Tax professionals must stay informed and adjust their processes to ensure compliance and effectively inform federal payment recipients. While this is not an executive order to delay tax refunds, it is a critical step forward – one that underscores the future of secure, efficient federal payments.
