These refund checks were returned by the Postal Service because they were unable to deliver them. Many taxpayers move and do not give IRS their new address and thousands of other refund checks have incorrect names or addresses. Also, taxpayers who file electronically can have their refund deposited directly into their bank account. This year, for the first time, taxpayers who file paper returns will have the option of direct deposit by filing Form 8888 with their return.
Direct deposit eliminates the possibility of lost, stolen or undeliverable refund checks.
Though every year there are thousands of undeliverable refunds, the total is small compared to the total number of refunds.