IRS Paper Checks: What Americans Abroad Need to Know About Refund Payments

The U.S. government is moving away from paper checks for federal payments, including IRS tax refunds, as part of a government-wide shift toward electronic payments.

Under Executive Order 14247, the U.S. Department of the Treasury directed federal agencies to prioritize digital payment systems to reduce fraud, lower processing costs, and deliver funds to taxpayers faster.

The transition began in late 2025, and the 2026 tax filing season is the first year the IRS is enforcing the new “electronic by default” approach for individual refunds.

For many taxpayers, the change simply means receiving refunds by direct deposit instead of by mail. For Americans living abroad, however, the situation is more complicated. For detailed answers to the most common questions about this change, see: IRS Paper Checks: 21 Questions Expats Are Asking

2026 Update: IRS Refund Delays and CP53E Notices

Recent reports suggest the IRS is already encountering significant friction as it transitions away from paper refund checks.

In March 2026, members of Congress requested clarification from the IRS after hundreds of thousands of taxpayers received Notice CP53E, which is sent when the IRS processes a return but cannot issue the refund electronically due to missing or invalid banking information.

Lawmakers reported that the IRS had already sent over 500,000 CP53E notices and planned to send hundreds of thousands more during the early weeks of the filing season.

The notice effectively freezes a taxpayer’s refund until updated banking details are provided through the IRS Online Account system.

For Americans living abroad, this development highlights a major challenge: the IRS is moving toward electronic refunds by default, but the agency still does not deposit refunds into most foreign bank accounts.

As a result, expats who file without valid U.S. banking information may face additional delays or administrative hurdles before receiving their refunds.

Key Takeaway for Expats

• The IRS is moving away from paper refund checks, but it still does not deposit refunds into most foreign bank accounts.
• For Americans living abroad, that creates a difficult gap in the system.
• If you file a tax return without valid U.S. banking information, the IRS may now freeze your refund and issue Notice CP53E, requiring you to update your payment details before your refund can be released.
• Without a compatible account in place, the process can delay refunds for weeks or even months.

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.

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What Is Notice CP53E?

A Notice CP53E is issued when the IRS processes a tax return but cannot send the refund electronically because valid banking information was not provided.

Under the new refund workflow:

1. The IRS processes the return.
2. The refund is temporarily placed on hold.
3. The taxpayer receives Notice CP53E requesting updated banking information.
4. The taxpayer generally has about 30 days to log into their IRS Online Account and update payment details.

If the taxpayer does not respond within that timeframe, the IRS may eventually issue a paper check, but the refund can be delayed significantly while the request moves through manual processing.

For taxpayers living abroad, this delay can be even longer due to international mailing times.

Why the IRS Is Moving Away From Paper Checks

The phase-out of IRS paper checks is not solely an IRS decision. It is part of a broader modernization effort across the federal financial system.

According to Treasury and IRS data, the move is driven by three main factors: security, cost, and processing speed.

Government reports show that:

• Paper checks are 16 times more likely to be lost, stolen, altered, or delayed than electronic payments.
• Mail-related check fraud has surged in recent years, with the U.S. Postal Inspection Service reporting tens of thousands of incidents annually.
• The federal government spent hundreds of millions of dollars processing paper payments in recent fiscal years.

Electronic payments are also significantly faster.

Tax returns filed electronically with direct deposit typically result in refunds issued within 21 days, while mailed checks can take 6 weeks or longer, especially for international delivery.

By 2025, over 93% of tax refunds will be issued via direct deposit, leaving only a small percentage still sent as paper checks. Executive Order 14247 aims to close that final gap.

What Executive Order 14247 Requires

Executive Order 14247 directs federal agencies to modernize payment systems and reduce reliance on paper transactions.

For the IRS, this has resulted in several important operational changes:

Electronic payments as the default

Beginning after the September 30, 2025, transition deadline, the Treasury began prioritizing electronic payment methods for federal disbursements, including tax refunds.

The “Notice and Freeze” refund process

If a tax return is filed without valid banking information, the IRS may freeze the refund and issue a Notice CP53E instead of automatically mailing a paper check.

Gradual shift away from paper payments

While paper checks are not completely eliminated, the Treasury has made it clear that they are now considered exceptions rather than the default payment method.

Limited Exceptions to the Paper Check Phase-Out

For the 2026 filing season, the Treasury has outlined a limited set of circumstances where paper checks may still be issued.

These exceptions generally include:

• Extreme geographic hardship (lack of banking access)
• Documented physical or cognitive impairment preventing digital banking
• Recognized religious objections to electronic financial systems
• Refunds issued to decedent estates

Importantly, living abroad by itself is not considered a hardship exception. This means expats are still expected to provide a U.S.-compatible electronic payment method whenever possible.

Why This Matters More for Expats

While most U.S. taxpayers already receive refunds by direct deposit, the shift away from IRS paper checks creates a unique challenge for Americans living abroad.

1. Foreign bank accounts are not compatible

The IRS still does not deposit refunds into foreign bank accounts.

Even if your local bank in London, Tokyo, or Mexico City provides IBAN or SWIFT numbers, the IRS payment system only works with accounts that have a U.S. routing number (ABA).

2. Refund freezes are now more common

In previous years, leaving banking information blank simply meant the IRS mailed a check.

Now, the IRS may instead trigger the CP53E “notice and freeze” process, requiring additional steps before the refund can be released.

3. International mail delays

If a paper check is eventually issued, it can take several additional weeks to arrive outside the United States.

4. Identity verification friction

The IRS has expanded use of ID.me identity verification.

If a return is flagged for identity verification, the refund remains paused until verification is completed, which can be especially difficult for expats without a U.S. phone number or address.

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.

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What Electronic Payment Options Are Available

To receive a refund electronically in 2026, the IRS requires a U.S.-compatible account with:

• a 9-digit routing number, and
• a U.S. account number capable of receiving ACH transfers.

For most expats, this means using:

• a U.S. bank account, or
• a digital financial account that supports U.S. routing numbers.

The IRS does not accept foreign bank accounts for direct deposit. For a comparison of U.S. banks and platforms that provide qualifying routing numbers from abroad, see: Best U.S. Banks for Americans Living Abroad

For a detailed breakdown of which accounts qualify, see:

Direct Deposit Explained: How It Works (and What Expats Need to Know)

Identity Verification Can Delay Frozen Refunds

Resolving a Notice CP53E typically requires access to an IRS Online Account, which uses ID.me identity verification.

Expats may encounter additional delays if documents or addresses cannot be verified quickly.

Enrolling in an Identity Protection PIN (IP PIN) can sometimes reduce delays in future filings by helping returns clear fraud screening systems more easily.

Does Opening a U.S. Account Affect FBAR?

Many expats worry that opening a U.S. account specifically to receive a tax refund will create new reporting obligations.

The short answer: No.

U.S. accounts are not foreign accounts

FBAR (FinCEN Form 114) only applies to foreign financial accounts. Accounts held with U.S.-based financial institutions are not reportable under FBAR.

The $10,000 threshold

FBAR reporting is only triggered when the combined value of all non-U.S. accounts exceeds $10,000 at any point during the year.

Keeping your refund in a U.S. account does not affect that threshold. For a full breakdown of when foreign accounts trigger FBAR and FATCA requirements, see: Opening a Foreign Bank Account: Avoiding Tax Filing Triggers

Watch Out for “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 for Tax Administration (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 at 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

If you expect a refund while living abroad, taking a few steps in advance can prevent delays.

1. Verify your ID.me: Ensure you can log into your IRS Online Account now.
2. Confirm your U.S. Routing Info: Double-check that your digital platform or U.S. bank is ready for a 2026 ACH deposit.
3. 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.

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Start Your 2026 Return

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Quick Answers About IRS Paper Checks

Bottom Line

The IRS is gradually moving away from paper refund checks as part of a broader transition toward electronic payments.

While the change simplifies refunds for many taxpayers, it creates new complications for Americans living abroad, particularly because the IRS generally cannot deposit refunds into foreign bank accounts.

Planning ahead — and ensuring you have a compatible payment method — can help avoid delays during the filing season.

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.