Business Tax Refunds Still Come as Paper Checks

Nearly every tax refund the IRS pays a business still arrives as a paper check in the mail. A Treasury watchdog report issued September 14 puts business refunds at 0.7 percent electronic. Meanwhile 97 percent of the payments businesses send the IRS already move electronically.

That gap affects any employer waiting on a Form 941 overpayment, a FUTA refund, or a corporate or partnership overpayment. Individual filers went through this change during the 2026 filing season, with held refunds and a notice in the mail. Businesses have not been moved yet.

The part you control is small. Most business returns now carry routing and account number lines. Leaving them blank is why a check shows up.

What the watchdog found about business refunds

The report is TIGTA Report Number 2026-IE-R015, a snapshot of the IRS paperless transition as of July 2026. It measures progress under Executive Order 14247, "Modernizing Payments To and From America's Bank Account," which President Trump signed on March 25, 2025.

Section 3 of that order told Treasury to stop issuing paper checks for federal disbursements, including tax refunds, effective September 30, 2025. Section 4 carves out exceptions, including people without access to banking services.

Across processing years 2024 and 2025, TIGTA found 654 million of 743 million IRS transactions were electronic, or 88 percent. The split by taxpayer type is where the story sits.

On the individual side, TIGTA counted 188 million of 222 million refunds as electronic, or 85 percent. Business payments to the IRS ran 290 million of 298 million, or 97 percent. Business refunds are the outlier in both directions.

TIGTA made no recommendations, and the report is informational only. Its Office of Audit is running a deeper review of the 2026 filing season.

Why business refunds lag behind individual refunds

TIGTA asked the IRS about the gap. The answer was that business tax account infrastructure sits behind individual accounts because it has not received the same development priority.

Two consequences follow, both stated in the report. There is no notice for business taxpayers equivalent to CP53E. There are no expanded business tax account features for supplying banking information.

We checked both on September 23, 2026. The IRS page "Understanding your CP53E notice" still addresses individual taxpayers only. The IRS Business Tax Account page, last reviewed August 24, 2026, lists balances, payments, transcripts, notices and authorizations. It lists nothing for adding a bank account to receive a refund.

The IRS fact sheet on the order, FS-2026-02, says the agency is adding the direct deposit option to most business return types. It also says paper check refunds for businesses will be phased out over time. It gives no date.

Where the bank fields sit for a business tax refund direct deposit

Before the order, not all business forms had bank account fields. The IRS told TIGTA that 69 forms needed updating before the 2026 filing season, and that it updated 54 of them.

Form 941 is the example TIGTA uses. On Form 941 (Rev. March 2026), line 15a is the overpayment. Line 15b asks whether to apply it forward or send a refund. Lines 15c through 15e take the routing number, account type and account number.

The instructions to that form name the executive order directly. They say the IRS will now issue Form 941 refunds by direct deposit.

The Form 941 instructions are blunt about leaving those lines empty. If you check the box asking for a refund but do not complete lines 15c through 15e, the instructions say your refund may be delayed.

They also list four reasons a request gets rejected and a check gets mailed instead. A name mismatch at the bank. An invalid account number. Digits crossed out or whited out. A corporation using a foreign bank or the foreign branch of a U.S. bank.

One more line from those instructions is worth reading twice. The IRS is not responsible for a lost refund if you enter the wrong account information.

The business forms that still have no bank fields

Fifteen of the 69 forms did not get updated. TIGTA reports that nine of them are amended return forms scheduled for processing year 2027. The remaining six are indefinitely delayed because the IRS has to handle those transactions manually.

Amended payroll returns sit in that group. Form 941-X, the Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, carries an April 2026 revision date. It has no routing or account number line on it.

That is the practical catch for employers. A payroll correction that produces a refund runs through a form the paperless rules have not reached. Excise refund claims sit in the same manual bucket, per TIGTA.

What the individual rollout suggests businesses should expect

The individual version of this change is worth understanding, because TIGTA describes the same steps as still pending for businesses.

When an individual filed without bank details, the IRS sent a CP53E notice giving 30 days to add an account or claim an exception online. The Government Accountability Office counted more than 4.2 million of those notices as of May 2026, according to the report.

The IRS also held the money. TIGTA writes that "the IRS elected to hold refunds for the maximum time allowed for all tax returns that did not have direct deposit information when submitted." Internal guidance generally lets the IRS hold a refund up to 45 days past the return due date without paying interest.

If nobody responded, a paper check went out six weeks after the return was received. The IRS confirmed that outcome in FS-2026-02 and on its CP53E page.

The rollout was rough. TIGTA found taxpayer awareness may have been low at the start of filing season. The IRS did not issue a news release until late September 2025, one week before the compliance date. Nearly 352,000 taxpayers called the CP53E phone line by March 28, 2026.

Tracking a business refund is harder than tracking an individual one

The IRS Where's My Refund tool asks for a Social Security number or individual taxpayer identification number, plus a filing status. Those are individual return fields, not EIN fields.

The Business Tax Account does show balances and payment history by year, and it serves tax transcripts.

A small caution on that last point. The Form 941 instructions say that whatever you check, the IRS may apply your overpayment to any past due tax account listed under your EIN.

Our guide to the IRS Business Tax Account covers the payment side of the same account. For the filings themselves, see our payroll and tax planning services.

Questions about business refunds and the paperless transition

The forms above change with each revision. Confirm with your CPA before you rely on any of this for a filing or a refund claim.