Canadian residents who file U.S. tax returns should be aware of upcoming changes to how the IRS issues tax refunds. The U.S. Treasury is moving toward electronic-only federal disbursements, which will affect refund delivery beginning with the 2025 tax year (2026 filing season).
Current Refund Options
At present, filers typically receive refunds in one of the following ways:
- Paper refund check mailed to the address listed on the return (including Canadian addresses)
- Direct deposit to a U.S. bank account, if available
- Third‑party settlement services, where a temporary U.S. account is used (fees may apply)
For taxpayers without a U.S. bank account, paper checks have historically been the default.
What’s Changing?
Effective September 30, 2025, the U.S. Treasury has directed federal agencies, including the IRS, to stop issuing paper checks except where electronic payment is not feasible. As a result:
- Electronic refunds will become the default method
- Paper checks will still be available by exception, particularly for taxpayers without access to U.S. banking
IRS Follow‑Up for Missing Banking Information
If no U.S. direct deposit information is provided, the IRS may issue a CP53E notice, requesting banking details or an explanation. Taxpayers will have 30 days to respond. If no response is received, the IRS generally will issue a paper check after a delay.
Impact on Canadian Taxpayers
The IRS has indicated that international taxpayers are not intended to be adversely affected, and exceptions are being developed for individuals who cannot access U.S. banking or electronic payment systems. However, additional steps and delays may be required.
While the IRS is moving toward electronic-only refunds, paper checks are not disappearing immediately for Canadian taxpayers. However, U.S. tax return filers should expect more scrutiny and possible delays where electronic payment information is not available.
If you have questions about how these changes may affect you or need assistance with your U.S. filing, please contact Paula Owen, Partner Andersen LLP.
If you have questions about current or prospective U.S. investments, we can help. Please contact Paula Owen, Partner to learn more.
