The IRS has posted a web page[^1] outlining information about the CP53E notice that will be issued to taxpayers when the IRS does not have valid direct deposit information when the taxpayer is due a refund. The notice will be sent either if the tax return does not contain bank account information or the bank account information on the return proves to be incorrect.

The issuance of federal tax refunds has undergone a significant procedural shift pursuant to Executive Order 14247. Tax professionals must recognize that this directive effectively limits the Service’s ability to issue non-electronic payments. The Service explicitly states that "Executive Order 14247, mandates the transition to electronic payments for all Federal disbursements, including tax refunds, except under certain circumstances".

This mandate has necessitated the creation of Notice CP53E, a procedural instrument designed to cure deficiencies in direct deposit information post-filing. The Service notes that "a recent Executive Order 14247 led to changes in the direct deposit options you now have available". Consequently, the CP53E notice functions as a mechanism to "allow individual taxpayers to provide us with a new or updated bank account to receive their tax refund via direct deposit if certain conditions are met".

Pre-Filing Due Diligence: Mitigating Notice Generation

Given the strict mandates of Executive Order 14247, practitioners should implement robust pre-filing verification procedures regarding client banking data. Because the order "mandates the transition to electronic payments for all Federal disbursements," filing a return without valid direct deposit information materially increases the risk of refund processing friction.

To avoid the administrative burden of Notice CP53E, tax professionals should prioritize the collection of accurate routing and account numbers during the engagement phase, prior to the submission of the return. Successful inclusion of valid banking data within the initial return filing preempts the need for the Service to solicit this information later. Failure to provide this data at the time of filing may trigger the CP53E process, forcing the client into a strict 30-day compliance window to avoid a default to paper processing. By ensuring the return is compliant with the electronic payment mandate at origination, practitioners effectively shield clients from the "paper check after 6 weeks" delay that results from non-compliance or non-response to the notice.

If a client is due a refund but has not previously supplied their bank account details and fails to include them with the current return, the IRS will issue Notice CP53E. To prevent the complications associated with this notice and the subsequent process for receiving the refund, advisors should proactively inform these taxpayers, ideally when collecting their current year information, that providing their bank account information with the return will resolve these issues.

Procedural Constraints: The Online Account Exclusivity

If a CP53E notice is issued, practitioners must advise clients that the resolution process is exclusively digital. The Service has removed the option for telephone-based resolution for this specific data update. The guidance rules definitively: "No, you can only update your bank account by accessing your online account. IRS employees cannot update bank account information".

This constraint renders Power of Attorney (Form 2848) representation ineffective for the specific act of updating the bank data via the Practitioner Priority Service. The taxpayer must personally "access or establish your online account by visiting your account to add or update your bank account information".

Strict Liability: The "One Opportunity" Rule

The Service has implemented a zero-tolerance policy regarding errors during the CP53E response process. Practitioners must counsel clients to exercise extreme caution when entering data, as the system provides no recourse for correction after submission. The Service states: "No, you will only have one opportunity to add or update your bank account using your online account".

If the taxpayer makes a transcription error or provides a closed account number during this single attempt, the electronic refund option is forfeited. The Service clarifies that "if your direct deposit is not accepted by the bank and is rejected, we will issue a paper check".

Timelines and Consequences of Non-Compliance

The CP53E notice initiates a 30-day statute of limitations for the taxpayer to act. The guidance specifies: "When you receive the CP53E notice you have 30 days to update or add a new bank account".

Taxpayers who fail to act within this window, or who refuse to establish an online account, are subject to a defined delay in refund issuance. The Service outlines the default provision: "If you don’t respond to the notice, we will issue a paper check after 6 weeks".

For clients who successfully navigate the update, practitioners should advise them to "allow 2-5 days for your refund information to update online". However, it is vital to remind clients that providing this information does not exempt the refund from standard Treasury Offset Program rules; the Service notes that "when your refund is issued, it may be subject to offset if you have other outstanding liabilities".

Summary of Advisory Protocol

To best serve clients under this new regime, tax professionals should:

Prioritize Upfront Collection: Align tax return preparation with the Executive Order 14247 mandate by securing bank account details before filing, thereby avoiding the CP53E workflow entirely.
Verify Online Access: Ensure clients have active credentials for their IRS Online Account, as "IRS employees cannot update bank account information" via phone.
Warn of Single-Attempt Failure: Explicitly warn clients that they have "only one opportunity" to enter data correctly in response to the notice.
Manage Refund Expectations: Advise non-compliant clients to anticipate a "paper check after 6 weeks" rather than immediate disbursement.

Prepared with assistance from NotebookLM.

[^1]: “Understanding your CP53E notice,” IRS Website, https://www.irs.gov/individuals/understanding-your-cp53e-notice , updated January 21, 2026