AICPA Urges IRS to Revamp CP53E Refund Notices After 3 Million Were Sent to Taxpayers

WASHINGTON — The American Institute of Certified Public Accountants (AICPA) is calling on the Internal Revenue Service to overhaul its process for issuing CP53E notices after more than 3 million were sent to taxpayers during the recent tax filing season, causing widespread confusion and concern.

In a letter dated June 9, 2026, and publicly highlighted on June 18, the nation's largest professional organization for CPAs provided a series of recommendations to Ken Corbin, the IRS Chief of Taxpayer Services. The proposals aim to clarify the purpose of the notices, reduce erroneous issuances, and better accommodate taxpayers who are exempt from receiving tax refunds electronically.

The CP53E notice was introduced by the IRS ahead of the 2026 filing season as a direct result of Executive Order 14247, “Modernizing Payments To and From America’s Bank Accounts.” The order, issued in March 2025, mandated a broad shift away from paper checks across the federal government, with a deadline of September 30, 2025, for the transition. In response, the IRS announced it would cease issuing most paper refund checks and began using the CP53E notice to collect or correct direct deposit information from taxpayers owed a refund.

However, the rollout of the new notice created significant friction for both taxpayers and tax professionals. According to the AICPA, the guidance provided by the IRS was insufficient and arrived after the filing season had already ended, leaving many recipients unsure how to respond. The ambiguity made it difficult to determine whether a notice was accurate, the result of an IRS error, or potentially fraudulent.

“The recommendations provided by the AICPA, coupled with increasing public outreach, will help reduce confusion and protect taxpayers who are exempt from the electronic refund requirement,” said Daniel Hauffe, AICPA Senior Manager for Tax Policy and Advocacy, in a statement. Hauffe added that implementing the changes could also “reduce the administrative burden on the IRS and provide clarity to taxpayers and their advisors.”

To address these issues, the AICPA’s letter outlined five key recommendations. First, it urged the IRS to issue more detailed guidance that clarifies the specific reasons a CP53E notice would be triggered, what action is required from the taxpayer in each scenario, and the agency's limitations on using the direct deposit information provided.

Second, the organization called for the IRS to review and modify its internal criteria for issuing the notices to eliminate the high volume of erroneous mailings. This would prevent businesses and individuals from having to spend time and resources responding to notices sent by mistake.

A significant portion of the recommendations focuses on taxpayers who are legally exempt from the electronic payment mandate, such as those without bank accounts. The AICPA proposed that the IRS should allow taxpayers to self-identify as exempt by adding a checkbox to income tax returns. This would create a proactive mechanism to prevent notices from being sent to them in the first place.

Further, the AICPA requested that the IRS formally publish and define all categories of excepted taxpayers in official regulations or other guidance. To prevent recurring issues, it also recommended that the agency implement policies to stop sending CP53E notices to taxpayers who have already established their exempt status in previous years.

The AICPA stressed the urgency of these changes, noting that the IRS has a critical window to act before the next major filing deadline. “Because extended 2025 calendar-year returns generally will be filed by Oct. 15, 2026, the IRS has the opportunity to review and analyze taxpayer and practitioner feedback and to modify IRS systems to remove unnecessary events that may trigger CP53E notices before that filing due date,” the letter stated.

For small and mid-sized businesses, these seemingly minor procedural notices can create significant operational headaches and anxiety. The rollout of the CP53E notice is a classic example of a well-intentioned policy creating unintended compliance burdens. In our experience, business owners already navigating a complex tax landscape were forced to divert time and resources to deciphering these communications, often unsure if it was a routine request or a signal of a more serious issue with their filing. The lack of clear guidance meant that even a simple notice could escalate into a time-consuming inquiry.

This is precisely the kind of friction that effective tax preparation and compliance services are designed to eliminate. A proactive approach to tax management involves not just accurate filing, but also skillfully managing all correspondence with tax authorities to resolve issues efficiently and prevent them from disrupting business operations. The AICPA’s recommendations are a welcome and necessary course correction. Business owners seeking to streamline their tax compliance and manage IRS communications effectively can learn more about available strategies from C&S Finance Group LLC at csfinancegroup.com.

With the AICPA’s formal recommendations now submitted, the focus shifts to the IRS. Tax professionals and business leaders will be watching closely to see whether the agency adopts the proposals and issues revised guidance before the October 15 extended filing deadline. The agency's response will determine if the next tax season will bring greater clarity or a repeat of the recent confusion.