Dear Valued Client:
On January 27, 2026, the IRS provided additional clarification on Executive Order 14247: Modernizing Payments To and From America’s Bank Account. This Executive Order was created to transition the IRS to fully electronic payments both to and from the agency.
What does the Executive Order Say?
The purpose of the Executive Order is to defend the IRS against financial fraud and improper payments, reduce costs, and increase efficiency. The Executive Order covers payments both to and from the Federal government, which includes payments to and from the U.S. Treasury Department and the IRS. The IRS started its plan to phase out paper refund checks and other disbursements on September 30, 2025. The Executive Order does not change how tax returns are filed or processed, only how payments are delivered to and received from taxpayers.
Direct Deposit of Refunds
During the 2026 filing season, taxpayers are heavily encouraged to use direct deposit in most circumstances. Though providing bank information is still voluntary, if no exceptions to the direct deposit requirement apply, the IRS expects refunds to take longer to process. For taxpayers with missing direct deposit information, the IRS will send letters using the last address on file, asking them to update their banking information. Taxpayers may also receive a CP53E notice requesting either bank information or an explanation of why such information cannot be provided.
Once the response is received and processed, the refund will be released. Taxpayers who do not respond within 30 days will receive a refund check after six weeks.
The IRS will continue to accept mailed payments – including cash, checks, and money orders. Over time, the IRS will fully transition to electronic payment methods only. In anticipation of this change, the IRS is working to expand its digital payment options to make it easier for individuals to pay electronically.
How We Can Help
When preparing your 2025 tax return, we will ask you to confirm your existing direct deposit/direct debit information, or request that you provide us with this information prior to filing. While we will still be able to file tax returns without this information, it’s important to note that the IRS expects delays in processing refund requests received without direct deposit information. To avoid refund processing delays, we ask that all clients provide us with this information as requested.
If you owe taxes in 2025, we recommend that you switch to electronic payments methods when submitting taxes to the IRS. Since the transition to all electronic payments is still ongoing, we will work with you to determine the best course of action if this change is not feasible for the 2026 filing season.
This link includes the full IRS Fact Sheet regarding this change, which we encourage you to review if you have additional questions:
https://www.irs.gov/pub/taxpros/fs-2026-02.pdf
Please feel free to contact one of our offices if you have any additional questions.
Thank you for the opportunity to continue serving your tax and advisory needs.
D’ARCANGELO & CO., LLP
