As the government shutdown enters its third week, ERC processing activity continues to deteriorate, both in pace and predictability. ERC refund checks, which have persistently remained at record lows, just hit a new post-moratorium floor. The IRS remains largely offline, and with staffing cuts accelerating, the backlog that many small businesses have endured for several years shows no sign of improvement in the near term.
📉 Total refunds processed: 43 refunds, down from 52 last week. This week marks the lowest weekly total since the ERC processing moratorium was lifted in August 2024.
📉 Total dollar volume: $16.6M, down from $18.7M last week and largely propped up by reissued or “stuck” checks.
📈 Average refund amount: $385,336, a modest rise from $360,020 last week, noting that most of this week’s larger refunds were large reissued checks rather than new approvals.
📉 Average days from filing to refund: 626 days, compared to 544 days last week, an increase of nearly three months of additional delays for this batch.
1. IRS Flags October 15 Filing Deadline Amid Shutdown – The IRS has confirmed that taxpayers must still meet their October 15 filing obligations despite the shutdown and a workforce reduction from 100,000 to under 40,000 employees. Meanwhile, the AICPA urged the Treasury to suspend all compliance actions for at least 60 days after the government reopens.
2. IRS Layoff Notices Expand During Shutdown – Over 1,400 Treasury employees, including many at the IRS, received reduction-in-force notices as the administration moves forward with its “workforce reshaping” efforts. The National Treasury Employees Union has vowed to challenge the layoffs.
3. TIGTA Report: IRS Phone Service Faltering – A new TIGTA report cited nearly 250 taxpayer complaints about unprofessional IRS phone service, excessive hold times, and dropped calls, confirming that reduced staffing is straining even basic taxpayer support.
4. Congress Still Deadlocked – The Senate again failed to pass a funding bill to end the shutdown, marking the eighth unsuccessful vote with no signs of compromise. Each passing week without resolution deepens the operational paralysis across the IRS. A ninth vote is scheduled, but Republicans need five more Democrats to break a filibuster, showing limited progress in the last 2+ weeks since the shutdown began.
Kenny's Conclusions
This week once again highlights how fractured the ERC program has become. Refunds are at their lowest point since the moratorium was lifted. Audits appear to be slowing only because the agency itself is running out of staff, leaving taxpayers trapped in a system that’s operating on fumes.
Until the shutdown ends and IRS leadership (or Congress) reestablishes accountability, ERC processing seems destined to waver between political dysfunction and bureaucratic collapse. Small business owners aren’t just waiting for the ERC refunds promised to them; they’re also waiting for Washington itself to start working again.
Signing off!
Kenny Dettman, CPA
Disclaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 14,000 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
