IRS rule changes that can delay tax refunds in the 2027 season

Do IRS rule changes cause tax refund delays for millions of filers?

Yes, for a specific group. The 2026 season showed that IRS rule changes cause tax refund delays for millions when a return lacks valid bank information. The National Taxpayer Advocate reported that by April 27, 2026 the IRS had sent about 4 million notices for returns with missing or incorrect direct deposit details, and that more than 14 million individual returns were suspended during processing for all reasons.

Most filers who e-file with a correct bank account saw no change. The delays land on people who used to get a paper check by default, people whose bank rejected a deposit, and people claiming credits that already carried a hold.

This page covers what changed and what it means for returns filed in 2027 for tax year 2026. For the general list of causes, see tax refund delayed.

The direct deposit requirement and frozen refunds

Executive Order 14247, signed March 25, 2025, directs federal agencies to stop issuing paper checks. The IRS began phasing out paper refund checks for individuals on September 30, 2025. You can still file a return without bank details, but the IRS now freezes the refund until you supply an account or request a paper check.

What happens when bank information is missing or rejected

1. The IRS processes the return but holds the refund.
2. It sends a CP53E notice explaining that bank information is missing, invalid or was rejected.
3. You have 30 days to add or update an account, or choose a paper-check exception, in your IRS online account.
4. After an online update, allow 2 to 5 business days for the refund status to change.
5. If you do nothing, the IRS issues a paper check after 6 weeks.

Two details catch people out. You get only one chance to add or change the account online, and IRS phone staff cannot make the change for you. The full walk-through is on our CP53E notice page and the guide to updating bank info in your IRS online account.

Rejected deposits no longer turn into checks automatically

Before the change, a deposit bounced by a bank usually came back as a mailed check. TAS now says most rejected deposits are frozen and wait for the taxpayer to act. A closed account, a typo in the routing number, or a name that does not match the account can each trigger this.

Paper checks are not gone for everyone. Exceptions cover hardship, legal or procedural requirements, and people with no electronic option, and alternatives include prepaid debit cards and some mobile apps. See getting a refund without a bank account and the paper check phase-out page.

Popular tax credits that still trigger refund holds

The headline 'IRS new rules and popular tax credits could delay refunds' mixes an old rule with new ones. The EITC and ACTC hold is not new: the PATH Act has barred refunds on those returns before February 15 since 2017, and it holds the entire refund.

What changes each year is the calendar. February 15, 2027 falls on a Monday that is also the Washington's Birthday federal holiday, a calendar fact rather than an IRS announcement. The IRS has not yet published projected 2027 deposit dates for early EITC and ACTC filers; it usually posts them in January. For comparison, in 2026 most early filers saw a projected date by February 21 and most refunds were expected by March 2.

Do the new deductions trigger reviews?

Tax year 2026 returns are filed under One Big Beautiful Bill Act rules, including new Schedule 1-A deductions for tips, overtime, car loan interest and a senior deduction. The IRS has not said these deductions are singled out for review. Any claim that does not match your records can still lead to a correction notice, so keep pay stubs, employer statements and loan documents that support each figure.

Returns suspended for review: IRS refunds delayed this year

Beyond bank problems, the 2026 mid-year report found that more than one million taxpayers did not receive refunds within the normal processing time and waited about 5 and a half weeks on average. Identity checks were a large share of the pain: the Taxpayer Protection Program line took about 2.4 million calls and the IRS answered only 19% of them, with an average wait of about 20 minutes.

If your status tool says your refund is late, our page on a refund delayed beyond the normal timeframe explains what to expect next.

How to avoid the new delays in 2027

1. E-file and enter a checking or savings account in your own name, your spouse's name, or a joint account.
2. Copy routing and account numbers from your bank's app or a check, not from memory. The IRS does not take responsibility for bank errors made by you or your preparer.
3. Do not send more than three refunds into one account. The IRS will not deposit a fourth.
4. If you want to split the refund, use Form 8888, which allows deposits into up to three accounts.
5. Set up your IRS online account before filing, so you can answer a CP53E within the 30-day window.
6. Get an IP PIN from your online account in January if you want an extra identity safeguard; you must enter it on your return once you have one.
7. Keep records for any new Schedule 1-A deduction you claim.

Still waiting on a refund from this year? Our list of reasons a tax refund is taking so long helps you pin down which one applies.