IRS Paper Refund Checks Phased Out: What Expats Must Do

The U.S. government has officially ended automatic issuance of paper refund checks for most federal payments, including IRS tax refunds, as part of a government-wide modernization effort.

Under Executive Order 14247, the U.S. Department of the Treasury directed federal agencies to transition to electronic payments in an effort to reduce fraud, lower costs, and speed up delivery. While the formal phase-out took effect on September 30, 2025, the 2026 tax season is the first year these rules are being strictly enforced for all individual filers.

Key Takeaway for Expats

The IRS no longer issues paper refund checks by default, and it still does not deposit refunds into foreign bank accounts.

This combination creates a “digital dead end” for millions of Americans living abroad. If you file your 2025 return without valid U.S. banking information, the IRS will now freeze your refund and issue a Notice CP53E, requiring you to take additional steps before your money is released.

Worried about your 2026 refund?

Don’t let a “Notice CP53E” freeze your money for months. Greenback’s expat tax specialists can help you set up the right electronic payment method and file with confidence.

Why the U.S. Government Ended Paper Checks

The paper check phase-out is not an IRS-only decision. It is a mandatory modernization of the entire federal financial system. According to the Treasury’s 2026 Payment Security Report, the move is driven by three primary factors: security, cost, and speed.

According to Treasury and IRS data:

Paper checks are 16 times more likely to be lost, stolen, altered, or delayed than electronic payments
Reports of mail-related check fraud incidents have skyrocketed, with the U.S. Postal Inspection Service reporting over 38,000 cases in a single year.
The federal government spent $657 million processing paper payments in fiscal year 2024 alone. It costs the Treasury roughly $0.50 to issue a single paper check, compared to less than $0.15 for an electronic transfer.

Government data shows tax refunds, electronic filing with direct deposit typically results in refunds being issued in less than 21 days, while mailed checks can take six weeks or longer, often more for international delivery.

In 2025, over 93% of all tax refunds were already issued via direct deposit. The government is now using Executive Order 14247 to close the gap on the final 7%, ensuring that federal money is no longer sitting in vulnerable mailboxes.

What Executive Order 14247 Requires

Executive Order 14247 mandates a total overhaul of how the federal government handles money. The Order specifically requires federal agencies to:

Eliminate Paper Checks by Default: As of the September 30, 2025 deadline, the Treasury has officially ceased the automatic printing of paper checks for federal disbursements, including all individual tax refunds.
Implement the “Notice and Freeze” Policy: Under new IRS guidelines, if a tax return is filed without valid banking information, the IRS is now required to freeze the refund rather than automatically mailing a check.
Sunset Physical “Lockboxes”: The Order also begins the phase-out of physical addresses used to receive paper checks. While the IRS still accepts paper checks for payments owed in early 2026, they are required to move all incoming payments to digital portals (like IRS Direct Pay) “as soon as practicable.”

“Narrow” Exceptions to EO 14247

For 2026, the Treasury has defined the “narrow exceptions” for paper checks very specifically. You may only bypass the electronic requirement if you meet one of the following criteria:

Extreme Geographic Hardship: You live in a remote area without any digital or physical banking infrastructure.
Mental Impairment: You have a documented condition that prevents you from managing a digital account.
Religious Objection: You belong to a recognized religious group with a conscientious objection to electronic banking.
Estate/Decedent Accounts: The IRS has confirmed that refunds for deceased taxpayers are currently exempt and will still be issued via paper check during this transition.

Take note

Simply “living abroad” is not a recognized exception for a paper check. The IRS expects expats to use U.S.-compatible electronic tools, which is why having a U.S. banking solution in place before you file is now a necessity, not a suggestion.

Why This Matters More for Expats

While many U.S. taxpayers already use direct deposit, the phase-out of paper checks creates a unique and significant hurdle for Americans living abroad.

1. The Foreign Bank Account Restriction

The most critical point for expats remains unchanged in 2026: The IRS does not deposit refunds into foreign bank accounts. Even if your local bank in London, Tokyo, or Mexico City has an IBAN or Swift code, the IRS system can only “speak” to U.S.-based accounts with a 9-digit ABA routing number.

2. The New “Notice and Freeze” Process (Notice CP53E)

In previous years, if you left your banking information blank, the IRS would simply mail a paper check to your foreign address. That safety net is now gone. Starting with the 2026 filing season, if you file a return without valid U.S. banking info:

The Refund Freeze: The IRS will hold your refund in a “frozen” status.
Notice CP53E: You will receive a formal letter (Notice CP53E) in the mail. This notice informs you that your refund is ready but cannot be issued until you provide a digital destination.
The 30-Day Clock: You have exactly 30 days from the date on the notice to log into your IRS Online Account and update your banking information.
No Phone Updates: IRS agents are strictly prohibited from taking bank details over the phone. If you don’t have an IRS Online Account set up (which requires ID.me verification), this 30-day window can be incredibly difficult to meet from abroad.

3. The “Six-Week Penalty” for Inaction

If you fail to respond to Notice CP53E within the 30-day window, or if you formally request a “paper exception” due to hardship, your refund moves into manual processing. This triggers a minimum delay of six weeks, plus the time it takes for international mail to reach you.

4. Identity Verification Friction

The IRS has also expanded its use of ID.me for expats this season. If your return is flagged for identity verification, your refund is paused until you complete a video call or document upload. Without a U.S. phone number or address, this can add weeks of “friction” to the process.

Take note

For expats, “Wait and see” is no longer a viable strategy. If you don’t have a U.S. electronic payment method ready before you click “file,” you are effectively opting into a months-long delay and a complex administrative hurdle.

Confused by the new “Notice and Freeze” rules?

Our team of CPAs and Enrolled Agents focuses exclusively on the unique challenges Americans living abroad face. We’ve helped over 23,000 expats in 190+ countries stay compliant and get their refunds on time.

What Electronic Payment Options Are Available

To receive a refund in 2026, the IRS requires a U.S.-compatible electronic account with a 9-digit routing number and a U.S. account number.

For most expats, this means using a U.S. bank account or a digital account that functions like one. The IRS does not accept foreign bank accounts.

For a step-by-step explanation of which accounts qualify and how to set them up, see: Direct Deposit Explained: How It Works (and What Expats Need to Know)

Identity Verification Can Delay Frozen Refunds

In 2026, resolving a Notice CP53E requires access to an IRS Online Account, which uses ID.me identity verification. Expats are more likely to encounter delays due to document and address verification issues.

If your return is flagged, your refund remains frozen until verification is completed. Enrolling in an Identity Protection PIN (IP PIN) can reduce future delays by helping your return clear fraud filters faster.

Does Opening a U.S. Account Affect FBAR?

One of the most common questions from expats is whether opening a new U.S. bank account specifically for their tax refund will create a new reporting headache.

The short answer is: No.

U.S. Accounts Are Not “Foreign”: Because FBAR (FinCEN Form 114) is specifically a report of Foreign Bank and Financial Accounts, any account opened with a U.S.-based institution is exempt from FBAR reporting.
The $10,000 Threshold: You only trigger an FBAR requirement if the aggregate value of all your non-U.S. accounts exceeds $10,000 at any point during the calendar year. Keeping your refund in a U.S. account does not count toward this total.

Watch Out for 2026 “Payment Modernization” Scams

Major policy shifts like Executive Order 14247 are a goldmine for scammers. As of January 2026, the IRS has issued a “Dirty Dozen” alert regarding two specific schemes targeting expats:

1. The “Refund Activation” Smishing Scam

Scammers are sending text messages (smishing) and emails claiming your 2025 refund is “pending” or “frozen” and needs to be “activated” by clicking a link.

The Reality: The IRS will never text or email you a link to “activate” a refund. Real notifications about your refund status will arrive via a physical Notice CP53E in your mailbox.

2. The “Expedited Paper Check” Fee

Some “ghost” preparers are claiming they can bypass the paper check ban for a fee, or that they have a special relationship with the Treasury to get you a paper check faster.

The Reality: No one can “buy” a paper check exception. These are strictly regulated by the Treasury and are reserved for documented cases of hardship.

How to Stay Safe in 2026:

Report impersonation calls to the Treasury Inspector General (TIGTA) at 1-800-366-4484.

Check the Sender: Real IRS notices come through the U.S. Postal Service.
Trust Your Account: If you receive a suspicious message, do not click the link. Instead, log in directly to your IRS Individual Online Account a irs.gov. If there is a real issue with your refund, it will be listed in your “Account Notices” section.
Report Scams: * Forward suspicious emails to phishing@irs.gov (Subject: “IRS”).

Your Next Steps

As we move into the heart of the 2026 filing season, the “Wait and See” approach is officially obsolete.

Verify your ID.me: Ensure you can log into your IRS Online Account now.
Confirm your U.S. Routing Info: Double-check that your digital platform or U.S. bank is ready for a 2026 ACH deposit.
File Early: If your refund is frozen for a Notice CP53E, you want that clock to start ticking as soon as possible.

Filing from abroad doesn’t have to be a maze.

Let Greenback handle the complexity so you can focus on your life overseas. We offer flat-fee pricing, bank-level security, and a 4.8-star average from expats just like you.

Frequently Asked Questions: IRS Paper Check Phase-Out (2026)

Is the IRS still mailing paper refund checks in 2026?

No, not by default. Under Executive Order 14247, the IRS has officially transitioned to electronic payments. If you file a return without banking information, the IRS will freeze your refund and send you Notice CP53E. You then have 30 days to provide account details via your IRS Online Account. If you do nothing, a paper check will eventually be issued after a minimum delay of six weeks.

Can I still mail a paper check to the IRS to pay my taxes?

Yes, for now. While the Executive Order also applies to payments to the government, the IRS is phasing this in more slowly. For the 2026 filing season, you can still mail a check or money order with your payment voucher. However, the Treasury is pushing toward a 2027 deadline to require all incoming tax payments to be digital.

What happens if I don’t have a U.S. bank account?

If you are “unbanked” or an expat without a U.S. account, you should not wait for a paper check. Instead, you can use IRS-approved alternatives such as:
– Digital accounts that provide a U.S. routing and account number.
– Prepaid Debit Cards: Reloadable cards that are “Direct Deposit Ready.”
– Direct Express®: The Treasury’s debit card for federal benefit recipients.

Are there any exceptions to the paper check ban?

Yes, but they are narrow. Exceptions are generally reserved for:
Deceased taxpayers (refunds for decedent estates).
Mental or physical impairment that prevents digital banking.
Religious objections to electronic financial systems.
Extreme geographic hardship (areas without internet or mail).
Note: Living abroad is not a recognized hardship exception.

Is the IRS Direct File program still available for free filing in 2026?

No. The Trump administration ended the IRS Direct File pilot program for the 2026 season. Taxpayers looking for free filing options must now use IRS Free File (provided through commercial partners for those under the income threshold), Free File Fillable Forms, or volunteer programs like VITA.

How long does it take to get a refund in 2026?

– Electronic Filing + Direct Deposit: Typically under 21 days.
– Paper Filing or Refund Freeze (CP53E): Minimum of six weeks, often longer for international taxpayers due to mailing and manual processing times.

This article provides general information about IRS refund policy changes and is not intended as personalized tax advice. Tax situations vary significantly among individuals, and government policies may change after publication. For guidance specific to your circumstances, consult with a qualified tax professional who specializes in expat tax matters. While we strive for accuracy, readers should verify all information with official government sources before making financial decisions.