Likely inspired by a thrilling 2025 World Series, the half-functional IRS has thrown yet another unexpected, inexplicable, but warmly welcomed, curveball our way: a new explosion of 2025-filed ERC refunds. Over the weekend, TaxNow observed a second wave of processing for claims filed between January 1 and April 15 of this year. This latest wave more than doubled the last one and is sure to put a smile on the faces of small and medium-sized business owners who chanced upon luck by filing at the last minute.
For those not keeping detailed notes on my prior updates, the last and only major spike for 2025-filed claims occurred more than two months ago, with the September 7 processing date. With this new surge, TaxNow estimates that the IRS has now worked through more than 50 percent of its 2025-filed inventory. For anyone still waiting on 2024 or earlier claims, this logic-defying advantage enjoyed by 2025 filers may feel like salt in the wound.
Continuing the good news, we are also seeing that Forms 941-X submitted by April 15, 2025, but posted to IRS account transcripts on or after April 15, 2025, appear to be processing normally. To create even more cause for celebration, refunds of all sizes across a wide variety of industries are being released, while IRS enforcement activity through denials and audits remains at an almost complete standstill.
So why is the IRS prioritizing 2025-filed claims? Our current, though unverified, theory is that the IRS bypassed “risk scoring” for claims submitted after the moratorium was lifted in August 2024 and processed them as long as no “high” or “unacceptable” level of risk was identified. Extending that logic, the remaining unprocessed 2024 and earlier claims likely fall into the “unacceptable” bucket, assuming that all “high”-risk claims have already been denied or are under examination.
What will next week bring under this theory? At this point, all we can do is stay in the batter’s box and hope the IRS doesn’t throw another wild pitch.
📈 Total refunds processed: 281, up by more than three times last week’s 84 refunds and the highest weekly total in the past three months.
📈 Total dollar volume: $205.3 million, more than double last week’s $102.6 million, marking the third-highest dollar volume since May 2023.
📉 Average refund amount: $730,575, down from $1,221,496, but still marking the third-highest average on TaxNow's record.
📉 Average processing time: 346 days, a dramatic dip from last week’s 619, and a clear signal that the vast majority of processed claims were 2025-filed. Nice to see the average dip below a year!
1. Government Shutdown Eyes Record Length - Now entering its second month, the 2025 government shutdown has become the longest in U.S. history, surpassing the 34-day record from the 2018-2019 shutdown. The stalemate stems from a partisan standoff over the extension of Affordable Care Act premium tax credits, with Democrats demanding their renewal before agreeing to reopen the government and Republicans insisting on negotiations only after funding is restored. The Congressional Budget Office estimates the shutdown has already cost the economy between $7 and $14 billion, with permanent losses expected even after reopening. Roughly half of IRS employees remain furloughed, further delaying appeals, Tax Court sessions, and taxpayer assistance—issues acutely affecting ERC claimants and their representatives. As economic and political pressure mounts, neither chamber has shown any movement toward compromise, despite growing frustration from lawmakers and the public alike.
2. ERC Appeals Lag Amid Shutdown - According to a recent article published by TaxNotes by Tax Analysts, the monthlong government shutdown has brought ERC appeals to a standstill, compounding an already severe backlog at the IRS. With roughly half of the agency employees furloughed and the Taxpayer Advocate Service offline, all pending ERC appeals conferences have been postponed, heightening the risk that some taxpayers could miss the two-year statutory window to pursue refund litigation. The Appeals Office was already struggling after earlier staffing cuts and a flood of ERC disputes stemming from the 2023–2024 processing pause, which left nearly 600,000 claims unworked as of Spring 2025. For businesses waiting years for their refunds, the shutdown’s impact may only add another frustrating chapter to an already drawn-out saga.
TaxNow's Take:
As the IRS continues to swing unpredictably between silence and sudden bursts of progress, the ERC landscape remains anything but routine. For now, 2025 filers appear to be rounding the bases while earlier filers are still stranded on deck. Whether this streak continues or if the IRS shifts its lineup again, TaxNow will keep tracking every pitch, swing, and score that shapes the next inning of the ERC game.
Signing off!
Kenny Dettman, CPA
Disclaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 14,000 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
