Renee Tiun
Renee, a foreign-trained attorney and enrolled agent at Basswood Counsel, specializes in taxation, corporate law, and estate matters, bringing over a decade of experience from Malaysia and a client-focused approach.
The IRS is implementing major updates to its refund delivery process as part of the federal government’s electronic payment modernization initiative. Beginning September 30, 2025, most paper refund checks will be phased out for U.S.-based taxpayers, with electronic payments becoming the standard method for receiving refunds. While this change affects domestic taxpayers, the IRS has established important exceptions for international taxpayers who may not have access to U.S. banking systems.
Below is a comprehensive overview of what both U.S.-based and international filers need to know as these new rules take effect.
Refund Delivery for U.S.-Based Taxpayers
Starting in late 2025, the IRS will substantially limit paper refund checks for taxpayers residing in the United States. Electronic refund delivery, primarily through direct deposit will become the default method for nearly all filers.
To receive refunds electronically, taxpayers must provide accurate U.S. banking information on their tax return, including a valid routing number and account number. The IRS has indicated that certain alternative financial products, such as prepaid cards and mobile payment apps, may also be compatible with IRS refund deposits, provided they support ACH transfers.
Paper refund checks will generally not be issued unless a taxpayer qualifies for a limited exception, such as a specific hardship or a procedural issue for which no electronic option exists. To avoid delays, domestic taxpayers should ensure that their bank account details are current and review IRS guidance related to the transition to electronic payments.
Refund Options for International Taxpayers
International taxpayers are treated differently under the new modernization rules. Because the IRS does not deposit refunds into foreign bank accounts, taxpayers living outside the United States remain eligible to receive paper refund checks. They are not required to provide U.S. banking information, and the IRS will not freeze or hold their refund if direct deposit details are missing.
Paper Refund Checks Mailed Abroad
If an international taxpayer does not provide U.S. banking information, the IRS will process the return normally and send a paper check to their foreign mailing address. While this remains a reliable option, the IRS notes that refunds delivered by international mail may take six weeks or longer. In practice, delays of several months are not uncommon, depending on the destination country.
Electronic Refunds for Taxpayers Abroad
International taxpayers who prefer electronic delivery can do so if they have access to a financial product that provides a U.S. routing number and an account number eligible to receive IRS ACH deposits. This may include U.S. bank accounts, certain mobile banking apps, or prepaid debit cards. Because some products offer U.S. routing numbers without supporting IRS deposits, taxpayers should confirm compatibility with their financial institution.
Another option is opening a U.S.-based account through an international bank with U.S. operations. There are financial institutions that offer U.S. accounts that can accept IRS direct deposits, though eligibility varies based on country of residence and bank policies.
CP53E Notices for Failed Direct Deposits
If a direct deposit cannot be completed, the IRS may issue a CP53E notice requesting updated banking information. Updates must be made online, as IRS phone agents cannot change bank account details. If no action is taken, the IRS will automatically issue a paper refund check approximately six weeks later.
Recommendations for Taxpayers
To prepare for the upcoming changes, taxpayers should review their refund delivery options early in the filing process. For U.S.-based taxpayers, ensuring access to a compatible electronic payment method is key, along with verifying that routing and account numbers are accurate. For international taxpayers, confirming that their mailing address is complete or exploring U.S.-based financial account options if they prefer direct deposit can help avoid unnecessary delays.
Conclusion
The IRS’s refund modernization initiative will make electronic payments the standard for U.S.-based taxpayers beginning in late 2025, with paper checks issued only in rare circumstances. International taxpayers, however, will continue to receive paper refund checks if they do not have access to U.S. banking services and will not be subject to refund freezes due to missing direct deposit information. By understanding these changes and preparing accordingly, both domestic and international taxpayers can help ensure their refunds are delivered as smoothly and efficiently as possible.