After last week’s brutal week of ERC processing, we were hoping for new signs of life in ERC activity this week. While we didn’t get the recovery we were hoping for, there were certainly a few bright spots in the past week’s data, despite fewer checks and increased IRS enforcement activity.
Here’s how this past week breaks down:
📉 Refunds processed slid once again to just 216, a 35% dip from last week’s 332. That makes this the second straight weekly decline and the second lowest week all year.
📈 On the bright side, our latest TaxNow data also shows that the average refund amount more than doubled, rocketing to $158,243, from the previous week’s $71,621. It’s the highest average we’ve seen in over a month, signaling that while fewer checks are being issued, the ones going out are much more meaningful, with seven-figure checks climbing into the double digits.
📈 The total dollar volume followed suit, climbing to $34.2M, a modest increase from $23.8M last week.
No dramatic rebound this week, but we’ll take the stronger average and higher total as a small win. Let’s hope it signals the start of a slow climb out of the summer slump.
As predicted, July has now officially broken the monthly record for IRS examination codes, with 153 quarterly examination codes, as compared to last month's all-time highs of 102.
1. Trump’s IRS Ceremony Marks Break From Tradition - President Trump hosted a private Oval Office swearing-in ceremony for new IRS Commissioner Billy Long, signaling an unusually close relationship with the traditionally independent agency. Long, a former Republican congressman who has close ties to the ERC industry, marks a break from the norm of nonpartisan IRS leadership transitions. The ceremony contrasts with past practice, where presidents kept their distance from tax officials.
2. House GOP Pushes Deepest IRS Cuts in Decades, Outpacing White House Proposal - House appropriators have proposed slashing the IRS budget by 23% for fiscal 2026, a deeper cut than the White House’s already severe 20% reduction. The $2.8 billion cut would drop IRS funding to $9.5 billion, the lowest since 2002, and dramatically reduce enforcement spending by 45%. Policy riders in the bill would also restrict IRS actions on 501(c)(4) rules, Direct File, and enforcement tools, while Treasury faces similar political limitations. Though the bill advanced along party lines, it faces long odds of passing, with Democrats criticizing it as unrealistic and damaging to taxpayer services.
3. IRS Appeals Chief Resigns Amid Ongoing Leadership Turnover - Elizabeth Askey, head of the IRS Independent Office of Appeals, will step down on September 1, continuing a wave of top-level departures within the agency. John Hinding, a current director within Appeals, will serve as acting chief. Askey’s departure comes as the office faces staffing shortages due to past workforce reductions, which she warned could disrupt operations. Her exit adds to the broader leadership instability at the IRS, where over 10 acting officials now fill key roles across major divisions. The departure also has many of us in the ERC industry wondering whether this will have any impact on the thousands of 105C and 106C protests in queue.
Kenny's Conclusions
With another sluggish week of processing and IRS enforcement hitting a record high, it’s clear we’re still in the thick of an ERC slowdown. But the spike in average refund size and total dollar volume suggests the pipeline isn’t completely dry, just more selective. As the dust settles from July’s audit surge and leadership changes shake up key IRS divisions, all eyes are now on whether August will bring relief or more of the same. We’ll be watching closely and keeping you updated.
Signing off!
Kenny Dettman, CPA
Disclaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 14,000 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
