A government watchdog found unclear instructions, limited outreach, and operational burdens during the IRS’s move to favor electronic refunds via CP53E notices in the 2026 filing season.
TIGTA found low early awareness and unclear guidance: the IRS didn’t issue a news release announcing the paper-check phaseout until September 2025 and didn’t outline the CP53E notification process until January 2026.
As of late March 2026, roughly 352,000 callers used the CP53E toll-free line, more than 470,000 taxpayers updated bank details online, and the IRS granted 300,537 exceptions to the electronic-payment requirement.
Business taxpayers lagged: while 97% of business payments were electronic in 2024–25, only about 37,000 of roughly 5 million business refunds (0.7%) were issued electronically.
# What happened
# Why taxpayers were confused
TIGTA identified three main causes for confusion: timing of public outreach, unclear notices, and operational hurdles. The IRS did not issue a news release about phasing out paper refund checks for individuals until September 2025, one week before the executive order compliance deadline. The agency did not finalize the notification process that became the CP53E notice until January 2026.
The notice text targeted filers who submitted returns without banking information, but many recipients who were not due refunds or who owed money still received the CP53E. Those taxpayers found a message about providing bank information for a refund confusing.
# Practical effects on taxpayers
Some taxpayers had to take multiple steps before receiving refunds: create IRS online accounts, complete identity verification through a third-party vendor, open bank accounts, or visit Taxpayer Assistance Centers. TIGTA said those requirements were burdensome for some filers and likely delayed some refunds.
# Scale and outcomes reported by the IRS
TIGTA included IRS-reported activity through late March 2026:
# Business payments and refunds
TIGTA highlighted a persistent gap for business taxpayers. During processing years 2024 and 2025, 97% of business tax payments were made electronically. However, only about 37,000 business refunds of roughly 5 million (0.7%) were issued electronically. The IRS has updated many business tax forms to collect banking information, but business online-account capabilities remain more limited than those for individual taxpayers.
# Broader electronic-transaction progress
Despite the rollout issues, the IRS reported progress on electronic transactions. During processing years 2024 and 2025, 654 million of 743 million tax payment and refund transactions—about 88%—occurred electronically.
# TIGTA's report status
The report was informational only. It included no recommendations and did not contain an IRS response.
# What this means for taxpayers and practitioners
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