New rules tied to the phase-out of paper checks could delay refunds unless taxpayers provide or correct direct deposit details.
Millions of taxpayers could face unexpected delays in receiving their tax refunds beginning this filing season, as the IRS rolls out new procedures tied to its shift away from paper checks and toward mandatory electronic payments.
Under changes taking effect for refunds claimed on 2025 tax returns filed in 2026, the IRS will temporarily freeze refunds in many cases where direct deposit information is missing, incorrect, or rejected by a bank, according to recent guidance published by the Taxpayer Advocate Service.
“The IRS will still process individual income tax returns (Form 1040 series) filed without bank account information,” the guidance states. “However, the IRS will temporarily freeze the refund until the taxpayer provides direct deposit information or requests a paper check.”
The changes are part of a broader federal effort to modernize payments, reduce fraud, and cut administrative costs. But advocates say taxpayers who are unaware of the new rules could experience weekslong delays if they fail to take simple steps before or after filing.
“I applaud the goal of modernization, particularly efforts that reduce the IRS’s dependence on paper,” National Taxpayer Advocate Erin Collins said in a December 2025 statement, describing paper processing as the IRS’s “kryptonite” that has long been a source of operational delays, inefficiencies, and greater vulnerability to theft.
Treasury checks are 16 times more likely to be stolen, lost, or altered than electronic payments and, once compromised, they can result in a long and stressful process for taxpayers to resolve the problem.
“To avoid refund delays, I strongly encourage taxpayers to provide their direct deposit information on their 2025 tax return or update their direct deposit information through their IRS online account,” Collins said in December, while calling on the IRS to communicate the changes to taxpayers and provide them with resources that they will need to comply with the new rules.
“Millions of taxpayers depend on their refunds to meet their basic living expenses, and they should not be surprised by unanticipated delays.”
The IRS has outlined specific scenarios in which refunds may be temporarily frozen under the updated rules.
By Tom Ozimek
