After several weeks of watching ERC refunds decline, this week finally gave us a small sign of life—though it’s more of a pulse than a comeback. A meaningful portion of these claims were worked by our dear friends at the Taxpayer Advocate Service (TAS). A big thanks to Erin Collins, the National Taxpayer Advocate, and her team for their continued support of small businesses.
📈 Total ERC refunds processed crept up to 372 this week, a modest rise from last week’s 355. It’s the first upward movement we’ve seen after weeks of double-digit declines, but it’s probably too early to break out the confetti.
📉 Unfortunately, we can’t have the best of both worlds just yet, as the average refund amount slid again—dropping to $153,427 from last week’s $165,070. That’s a 7% dip and the lowest we’ve seen in over a month.
📉 Another slight upset this week: TaxNow’s latest data shows total dollar volume decreased to $56.9 million, just shy of last week’s $58.6 million. The flow’s still there, but the pressure has definitely eased.
1. Billy Long Gets the Nod from the Senate Finance Committee - President Trump’s nominee for IRS Commissioner, former Congressman Billy Long, has advanced to a full Senate vote following a narrow party-line approval by the Senate Finance Committee (14-13). Despite criticism from Democrats over Long’s lack of tax policy experience and his ties to controversial tribal tax credits, Republican members expressed confidence in his responses and the committee’s vetting process. If confirmed, Long would take over an IRS facing significant challenges, including leadership turnover, workforce attrition, and the implementation of GOP-led tax reforms. A final Senate vote has not yet been scheduled and may not reach the floor until July.
2. 'One Big Beautiful Bill’ Faces Major Hurdles under the ‘Byrd Rule’ - The House’s “One Big Beautiful Bill” proposes barring the IRS from paying ERC refund claims filed after January 31, 2024, while imposing stiff penalties on ERC promoters. According to a recent article by Christopher Moran at Venable LLP, these provisions face significant procedural challenges in the Senate under the Byrd Rule, and could be struck down as unconstitutional due to retroactive application violating the Fifth Amendment’s Due Process Clause. Additionally, penalties on promoters raise concerns about violating taxpayers’ Seventh Amendment right to a jury trial. Even if the bill passes, it’s likely to face serious legal battles ahead challenging both the retroactive repeal and promoter penalties.
3. Turbulence at the IRS: Leadership Turnover, Layoffs, and Shifting Priorities - The IRS is undergoing significant changes with leadership turnover and mass layoffs, driven by efforts to streamline government efficiency. New policies now allow limited sharing of taxpayer data with ICE for non-tax criminal cases, while ongoing staff shortages have led to canceled audits and increased reliance on artificial intelligence. Treasury reports reveal the IRS is still struggling to reduce improper payments on refundable tax credits, and is pushing ahead with slight increases in health savings account limits for 2026. Despite challenges, the IRS aims to improve enforcement, particularly targeting high-income non-filers, even as uncertainty looms over the agency’s future direction.
Kenny's Conclusions
While this week’s ERC numbers offer a flicker of stabilization, the broader outlook remains uncertain. A slight uptick in refund volume, fueled in part by the Taxpayer Advocate Service, is offset by continued declines in average check size and total dollar volume. Meanwhile, enforcement activity is heating back up, with audit indicators reappearing for the first time in months. Layer on top the potential for seismic policy shifts, between Billy Long’s nomination, retroactive ERC legislation, and mounting IRS upheaval,and it’s possible we are entering a new, more turbulent chapter in the ERC saga. Stay tuned, stay compliant, and stay ready…
Signing off!
Kenny Dettman, CPA
Disclaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 12,500 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
