📈 After an impressive spike last week, this week’s ERC refunds said, “Hold my beer.” The May 19th ERC refund batch now holds the title as the highest dollar volume since 2023, and quite possibly, the highest in ERC history. Our most recent data show that at least 1,286 ERC refunds were processed, a substantial uptick from the 958 refunds processed the previous week. That’s a whopping 34% week-over-week increase.
📈 Not to be outshined, the average refund amount per check jumped 30% with an impressive all-time high of $231,068 this week, up from $180,538 last week. What a week to be an ERC refund waiting for their time to shine!
1. HIRE Coalition Highlights Potential for ERC Killer Provision in Tax Bill: According to HIRE Coalition President Tim Parrish, a draft tax bill could drop as soon as today, May 9th, pending the outcome of the White House–Congress leadership meeting. Ways & Means markup is still expected next week, but ERC remains a target "pay for". While ERC early termination (i.e., January 31, 2024) could face hurdles in the Senate under the Byrd Rule, House leadership appears willing to advance its own priorities regardless of Senate viability. If you filed after January 31, 2024, now is the time to contact your representative and make your voice heard.
2. Administration Floats Plan to Replace IRS with Tariff-Based 'External Revenue Service': Commerce Secretary Howard Lutnick announced that the Trump administration is exploring a plan to replace the IRS with an “External Revenue Service” funded by tariffs rather than income taxes. The idea, recently presented during a Cabinet meeting, hinges on the belief that “hundreds of billions” in tariff revenue could support federal operations. However, tax policy experts warn that even Trump’s proposed tariffs fall well short of replacing the $5.1 trillion the IRS collects annually. With significant skepticism from economists and a persistent federal deficit, many view the proposal as politically bold but fiscally unrealistic.
3. New Bipartisan Bill Shields PEOs from Liability in Clients’ Payroll Tax Credit Claims: A bipartisan bill introduced by Reps. Mike Thompson (D-CA) and Beth Van Duyne (R-TX) aims to protect Professional Employer Organizations (PEOs) from being unfairly held liable for payroll tax credit claims made by their clients. Under the proposed legislation, only the party initiating and benefiting from the claim would be liable—unless the PEO is involved in fraud or knowingly allows a false claim. The bill also seeks to streamline the review process by decoupling client claims and clarifying responsibility for information submitted. This legislative push follows years of advocacy by NA
4. Trump Proposes Deep IRS Budget Cuts, Sparking Concerns Over Tax Enforcement and Revenue Loss: The Trump administration’s fiscal 2026 budget proposes slashing IRS funding by 20%, reducing it to its lowest level since 2002, despite inflation and growing responsibilities. The White House frames the cut as a move to end the “weaponization” of the IRS, but critics warn it would cripple enforcement, customer service, and the agency’s ability to close the $700 billion annual tax gap. Former IRS officials and tax experts argue the cut could lead to increased deficits by weakening efforts to ensure wealthy taxpayers and businesses pay their fair share. While the proposal marks only the beginning of congressional budget negotiations, its implications for tax collection and government funding are significant.
5. PEO Challenges IRS Over $10M in Denied Employment Tax Credits: Barrett Business Services Inc., a Professional Employer Organization (PEO), is disputing the IRS’s denial of nearly $10 million in work opportunity and empowerment zone employment tax credits for tax years 2017–2020. In a Tax Court petition, Barrett argues it qualifies for the credits because it pays all wages and benefits to workers—even when clients fail to pay—using its own employer identification number. The IRS doesn’t dispute Barrett’s wage payments but denies the credits on the basis that Barrett isn’t the employees’ common-law employer. Barrett contends that statutory and regulatory definitions of eligible employers support its claim, and the outcome of the case could set an important precedent for non-certified PEOs.
Kenny's Conclusions
This week’s ERC surge is a reminder that while the refund pipeline may be unpredictable, it’s far from dry. With record-setting disbursements, faster turnaround times, and continued legislative rumblings in D.C., the ERC landscape remains as dynamic as ever. TaxNow will continue monitoring developments closely—because when it comes to ERC, timing, data, and advocacy matter more than ever.
Signing off!
Kenny Dettman, CPA
Disclaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 10,000 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
