Executive Order 14247 requires federal disbursements, including income tax refunds, to migrate from paper to digital form. As you can imagine, this is causing some bottlenecks in the refund process. Through mid-March, 1.4 million refunds are stuck, primarily due to this change. If this happens to you, you will receive IRS Notice CP53E. Here is what you need to know.

IRS Notice CP53E

• No bank account. Your tax return did not include a direct deposit account.
• Name mismatch. You file a joint tax return, but you have the refund direct deposit into a bank account with only one name on it. Or the name on the bank account simply does not match the name on your tax return.
• Bank rejection. For whatever reason, your bank rejects the deposit. Either you have an error in the account or routing number, or the bank simply rejects the transaction for an unknown reason.

What to do

1. Try to understand the error. Do this first so that you know what action to take. Otherwise, you risk repeating the error and not solving your problem.
2. 30 days to respond. You have 30 days to respond to the notice by going to irs.gov/CP53E. It will direct you to either create or log in to your IRS ID.me account. Then follow the instructions to correct the error.
3. Use the “Where’s My Refund?” online service to track your refund status. This is a good tool for tracking your refund, even if you do not receive a CP53E notice. You will need your Social Security number, the exact amount of your refund, your filing status, and your tax year. This can be found at irs.gov/refunds.
4. Wait. What the notice DOES NOT tell you is that if you do not respond, the government will still issue a paper check. But it will take up to six weeks. In this case, double-check your address to ensure it is valid.

Do not:

• Try to get the IRS to fix it. The IRS cannot take your bank account information over the phone. They will direct you to create or log in to your online account.
• Get someone else to correct it. Unfortunately, you have to fix this one yourself. The IRS does not want you to file an amended tax return to fix this problem. And you should not grant anyone other than you access to your online account.
• Do nothing. If you do not receive your refund in a timely manner, take action. The problem may not be related to a direct deposit error. In this case, the first place to start is the “Where’s My Refund?” page service.

A quick note on payments

If you owe taxes, you can still pay by paper check. This is not the government’s preferred method of receiving funds, but it is still available to you.

The problem is so bad that the head of the Treasury and the Ways and Means committee are making noise with the IRS to find solutions. So if you receive a notice, your sole consolation appears to be that you are not alone. Contact our RRBB advisors for more information or if you have any questions.