1.4 million filers face tax refund delays amid IRS paper check phaseout

A growing number of filers are facing tax refund delays amid a government-wide phaseout of paper checks.    

House Ways and Means Committee Democrats this week sent another letter to Treasury Secretary Scott Bessent, with “additional concerns” about roughly 1.4 million IRS notices sent to filers about refund delays related to paper payment requests. At the time of the lawmakers’ initial letter, dated March 9, they said more than 830,000 taxpayers had received such notices.

The IRS notice, known as CP53E, asks taxpayers for updated banking information to receive refund payments via direct deposit. Recipients have 30 days to provide these details via an IRS online account, or the agency will issue a paper refund after six weeks.  

“This matter is time sensitive and urgent as individuals and families facing delays need their tax refunds to offset the high cost of gas, food and basic necessities,” the lawmakers wrote.

The refund payment change stems from an executive order signed by President Donald Trump in March 2025, which requires government agencies to shift from paper to electronic payments. 

The IRS in September announced the transition to paper payments to protect taxpayers, speed up refunds and reduce costs.

The Treasury did not respond to CNBC’s request for comment about the letter from House Ways and Means Committee Democrats.

Many Americans are seeing bigger tax refunds this season due to the changes enacted via President Donald Trump’s “big beautiful bill.” 

As of March 13, the average refund amount for individual filers was $3,623, up by about $350 from one year ago, according to the latest IRS data. 

That windfall could be offset by higher fuel prices amid the Iran war, depending on how long the conflict lasts, some economists say. The price of gasoline on Friday was at a nationwide average of $3.97 a gallon, up by about 33% from one month ago, according to AAA.

The Trump administration has been focused on the size of tax refunds as many Americans struggle with the rising costs of fuel, groceries, housing and other living expenses. Affordability is a key issue for both parties as the November midterm elections approach.

During the 2025 filing season, roughly 94% of individual taxpayers opted for refunds via direct deposit by providing banking details on their returns, according to the National Taxpayer Advocate. The remaining filers, about 10 million taxpayers, received refunds via paper check.

The IRS transition from paper checks to electronic payments affects “a range of populations,” Omeed Firouzi, a practice professor and director of the low-income taxpayer clinic at Temple University’s Beasley School of Law, told CNBC.

Firouzi, who submitted comments to the Treasury via the American Bar Association ahead of the change, said the policy could significantly impact “unbanked” taxpayers, senior citizens, unhoused individuals or younger filers who move more frequently.

If you receive a CP53E notice, you must provide banking details via an IRS online account within 30 days, or the IRS will issue a paper refund after six weeks. But some filers don’t have easy access to Wi-Fi, or computers, he said.

While Firouzi said he supports the reasons for phasing out paper checks, the implementation has added “more administrative paperwork and burdens that seem to be counterintuitive.”    

Elaine Maag, a senior fellow at the Urban-Brookings Tax Policy Center, told CNBC she agrees with the Treasury that paper refunds have been “problematic” for a variety of reasons.

Paper checks have more errors, they don’t always reach the right person and the agency prefers more secure forms of payment, she said.

But “when you move quickly, and you implement a policy without advance notice, it’s very difficult for people to react,” Maag said.

Ultimately, delayed tax refunds can create “financial hardships” for some filers, such as delays on important purchases, medical care or turning to higher-cost financial services, she said.