IRS Notice CP53E

[taxdoer]

Is anyone getting Notice CP53E for refund direct deposit when the client owed and did not have a refund?

[Just-Lisa-Now-]

I only had one client call about this, we missed an estimated payment on her return so she IS due a refund, so hers made sense,  But im seeing reports of this in various tax professional message boards, its happening to LOTs of people.

[IRonMaN]

I got my first call this morning.  Cient owed seven grand and the IRS wanted to know his bank account for his refund.  The IRS computers must be tired after a long tax season.

[Just-Lisa-Now-]

@IRonMaN  maybe they missed an ES payment like my client?

[IRonMaN]

Nope.  They would have to have missed all of his estimates to even get int he ballpark.

[taxiowa]

It has been happening all tax season.  IRS must have set a figure $1,000 or $3,000 owed and out shoots a letter saying they should have electronic withdrawal.  Many a person has also got letter if they requested refund to be mailed.  IRS must figure it is cheaper to send them letter and check in six weeks, rather than just send them a refund check.  

[rodrigo]

Yup. Got a couple so far. No refund. No estimated payments.

[Bandicoot2]

I have one client who got this letter.  We had not requested direct deposit. It  appeared genuine.  Then I saw an article on my news feed that this is the latest SCAM going around. The article said the the QR code was the give a way. Luckily my client did not use the QR code but went directly to the IRS website.  I have 40 years in the industry and the letter absolutely fooled me.

[Just-Lisa-Now-]

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@IRonMaN wrote:

Nope.  They would have to have missed all of his estimates to even get in the ballpark.

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but if they already paid the 7grand and an estimate was missed, theyd be due a refund.

[IRonMaN]

I'm very comfortable with the numbers but not that comfortable with the IRS computers.

[TaxGuyBill]

At least some of the letters are for correctly refunding some of the Underpayment of Estimated Tax penalty.

If you let the software calculate the Underpayment of Estimated Tax penalty, the software does NOT take into account (a) if the taxpayer is in a disaster area or (b) if the taxpayer paid the amount owed on their own before April 15th (unless you manually go in and change the date on the 2210).  Both scenarios result in the software calculating too large of a penalty, which means the taxpayer may be due a refund.

[kgreen8393]

Yes, just received my first call this morning.  We applied the entire overpayment to 2026 so they were not due a refund.

[Just-Lisa-Now-]

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@kgreen8393 wrote:

Yes, just received my first call this morning.  We applied the entire overpayment to 2026 so they were not due a refund.

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Ive seen lots of people mention that the refund was applied to the next year, the IRS computers must still pick it up as a refund but with missing bank info, so the letter goes out.

[kgreen8393]

Just received another notice from a different client that owed taxes.  No refund or overpayment.  Both letters had a QR Code on the letter

[Taxprohere]

Had about three or four clients get this notice; today was a client who pays his balance online, never has had a refund in the dozen or so years as my client, and so never has given me his account#.  It may be the IRS is sending this notice when there is no bank info in the data file regardless of refund or balance due.

[ElizabethLNC]

I've had three calls so far.  I'm in NC.  I forgot that the Hurricane Helene disaster relief spilled into 2025 returns.  Two of these clients are due refunds due to the underpayment penalty calculating incorrectly on the return.

The third refused to direct deposit the refund.  Then he had trouble with the IRS online account and didn't complete that.  He can just wait for the refund.  I kinda hope it takes even longer that we've been told.  Karma and all that, you know?

[BobKamman]

This is bumped to the first page because people should read the parts about how, if it has a QR code, it's fake.  

[SuzieQ1]

so frustrating.  Some taxpayers are so upset when they get a letter from the IRS as it is.  To send something saying we can't deposit when they owe $20K is maddening.  Not to mention, not cost effictive. 

[IntuitKate]

The IRS does include legitimate QR codes specific notices.  From the IRS website: "Many notices have QR codes that help direct taxpayers to their online tax accounts. In addition, these letters inform the taxpayer of the status of their unpaid balance, options for resolution and their rights in the collection process." 

However, when in doubt, always verify notices by going directly to IRS.gov/Account instead of scanning the QR code. 

[hestiia]

It seems this notice is related to EO 14247, Modernizing payments to and from America’s bank account, signed March 2025 (http://irs.gov/newsroom/modernizing-payments-to-and-from-americas-bank-account). The US Dept of Treasury, along with the IRS, is going to transition to fully electronic federal payments.

I think the IRS is sending notices now, even if the taxpayer it's being sent to has no refund due, to have most people have direct deposit set up for next year's tax season.

[BobKamman]

California CPA and maillist creator James Counts adds this information.  So, IRS doesn't assess the ES penalty at the same time as they assess the tax?  And these taxpayers will receive bills later?

"On one of my tax groups, it was posted that an EA out of New York got this response when they called the IRS Tax Practitioner Hotline to why their client got the CP53E letter from the IRS.

    My client received the same CP53E letter and we did reach out to the tax practitioner hotline. After a wait on hold for over an hour, I spoke to an agent (Agent Whitney) who said that they want to refund my client the underpayment penalty that I had him pay with the return. She recommended that the client, not do anything at this time, wait 6-8 weeks for a paper check, then do NOT cash the check, and wait till the IRS computers catch up and access [probably means "assess"] the underpayment penalty. She did agree that this is ridiculous but said that the IRS computers have not calculated the underpayment penalty yet, which is what they are trying to return. Once they send the underpayment penalty notice, she said to return the refund check with the penalty notice and ask for any additional interest and penalty to be reversed (but keep copies of everything)."

[cakeen]

We just got through to the IRS due to 3 of these letters being received so far and have the following to report (hope it helps):

• the letter is legit
• 2 of the notices were due to estimated payments sent by clients that we didn't report.
• 1 was due to an amended return that is not processed yet. In the case of the amended return, the client does owe that amount sent but since the amendment has not been processed the IRS doesn't realize it.
• If clients don't go online to update their banking within 30 days, paper checks will be mailed out 6-8 weeks later.
• To update banking they go to their IRS account (if they have one), go to Profile at the top of the page then Update Banking on the left.

[hestiia]

6-8 weeks from their filing date or on the date the 30-day window to update closes?

[cakeen]

We understand it to be 6-8 weeks after the 30 day window closes.