As tax season approaches, it’s important for taxpayers to be aware of a new rule from the Internal Revenue Service (IRS) that may impact the speed of their tax refunds. The IRS is encouraging direct deposit as the preferred method for receiving refunds, part of a broader effort to streamline the filing and refund process through digitization.
This shift toward digital payments means that taxpayers will need to provide their bank account and routing numbers to ensure timely refunds via direct deposit. Reports from The Philadelphia Inquirer indicate that the IRS will temporarily freeze any refunds that are submitted without this banking information until the taxpayer either supplies the necessary details or opts for a paper check.
Mitchell Gerstein, a seniors tax adviser at Isdaner & Company, highlighted that many taxpayers may not fully understand this transition. He emphasized the importance of sharing bank information with the IRS, noting that electronic payments have become the default.
Moreover, the IRS has stated that any direct deposits rejected by banks will also be frozen, and these will not automatically be reissued as paper checks. In cases where a refund is frozen, taxpayers will receive a CP53E notice detailing the necessary steps to resolve the issue. If the taxpayer fails to respond within 30 days, a paper check will be issued after six weeks.
This new directive underlines the IRS’s commitment to enhancing the accessibility and efficiency of tax refund processing, while also encouraging a more digital approach to tax transactions. As taxpayers prepare to file, understanding these changes could lead to a smoother and more predictable tax season.