This week’s ERC processing update shows a tale of two trends: fewer checks, but bigger ones. While the number of refunds processed saw a mild decline, total payouts have pushed north, driven by a spike in average refund size.
On the ERC audit front, the IRS appears intent to dish out an all-you-can-eat buffet of ERC examinations, closing July out with a record-breaking number of ERC quarters flagged for audit.
Here’s how the week went overall:
📉 Refunds processed slipped to 445, down from last week’s 489. With other positive indicators holding strong, there’s no major cause for concern here.
📈 Our latest TaxNow data also shows the average refund amount climbed to $189,554, up from $169,217. This marks the highest average we’ve seen in over two months, which suggests an uptick in larger approvals.
📈 We’ve got another win for the week as the total dollar volume increased to $81.2M, up from $67.5M. Despite lower volume, the sheer size of this week’s checks carried the week to one of the strongest totals we’ve seen in months.
It’s not a clean rally yet, but if this pace of approvals holds, we may be on the verge of a late-summer resurgence. Stay tuned!
Finally, total ERC quarters topped out this month at 270, which is up nearly 3X from the prior monthly high of 105 in June. Watch your mailboxes closely for IRS Forms 4564!
1. OBBBA Brings Tax Relief and Stability for Business Owners, With Big Gains for Innovation and Planning - President Trump’s One Big Beautiful Bill Act (OBBBA) offers substantial wins for businesses by solidifying and enhancing key tax provisions like 100% bonus depreciation, Section 199A, and R&D expensing. Tax professionals praise the bill’s shift toward long-term predictability, enabling better planning for both tax strategies and business succession. Enhanced benefits for tech startups, increased estate tax exemptions, and relief on interest expense limitations make the bill especially favorable to pass-through entities and innovation-driven companies. Despite the positives, advisors caution that new limitations like the permanent excess business loss cap and the need to guard against dubious tax schemes still require careful navigation.
2. Trump’s Tax Law Unlocks Billions in Business Investment, But Tariff Uncertainty Lingers - Major U.S. companies are reporting stronger cash flow and renewed investment momentum, crediting the latest tax law changes that allow immediate expensing of domestic capital and R&D costs. Firms like Johnson & Johnson, AT&T, and General Dynamics are ramping up spending on infrastructure, innovation, and job growth, with some raising their financial forecasts by hundreds of millions. The accelerated deductions are helping offset uncertainty from tariffs and global market pressures. Still, experts caution that the long-term impact depends on how businesses balance these tax benefits against rising operational costs.
Kenny's Conclusions
As the ERC landscape continues to evolve, this week’s trends highlight a dynamic push-pull between audit intensity and high-dollar approvals. While refund volume took another dip, the surge in average check size and total payouts signals that meaningful progress is still being made, especially for larger, well-supported claims. Meanwhile, with ERC audits reaching new highs, businesses should remain vigilant and proactive, ensuring documentation is airtight and ready for scrutiny. As we enter the back half of Q3, all eyes are on whether this momentum can translate into a broader recovery. Until then, the audit party rolls on, so keep your files close, your inboxes closer, and stay tuned for next week’s insights.
Signing off!
Kenny Dettman, CPA
Disclaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 14,000 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
