Even with the government shutdown now stretching into its second month, the IRS continues to quietly process ERC refunds, a reassuring reminder that refund activity hasn’t completely stalled. While total volume has eased from last week’s extraordinary surge, the composition of this week’s payments is especially encouraging: a blend of both 2025-filed and older 2024 claims, rather than the IRS focusing almost exclusively on the most recent submissions.Among this week’s highlights, a $20 million refund, the largest we’ve seen in months, made its way through the system, proving that even large and complex claims are still being released. Combined with promising movement in Washington toward ending the shutdown, the overall tone this week feels cautiously optimistic that we may finally be turning a new corner.
📉 The IRS processed 157 refunds this week, down from 281 last week. While this represents a decline of roughly 45%, it’s still well above pre-shutdown weekly averages and the stalled processing we saw in the September and October timeframes.
📉 Refund dollar volume came in at $90.5 million, about half of last week’s $205.3 million. The week’s totals were buoyed by a single $20 million refund, the largest observed in several months, confirming that large-dollar claims remain in play.
📉 The average refund amount dropped to roughly $576,474, down from $730,575 last week, reflecting a broader mix of smaller 2024 claims rather than just higher-value 2025 filings. Despite it being the third straight declining week, the current week's average is still the fifth-highest of all time.
📈 Average processing time ticked upward to 456 days, compared to 346 last week, confirming the notion that the IRS is balancing older and newer filings rather than exclusively clearing recent submissions.
1. Senate Advances Path to Government Reopening — The Senate voted 60–40 to advance a bipartisan deal to reopen the government through January 30, 2026, pairing a short-term funding measure with a three-bill appropriations package.
The agreement guarantees back pay for furloughed workers, reverses the reduction-in-force (RIF) notices affecting nearly 1,400 Treasury and IRS employees, and prevents additional furloughs through the new funding deadline.
Although the bill doesn’t yet include an extension of the enhanced Affordable Care Act premium tax credits, it marks the first real progress toward ending the shutdown. The House is expected to take up the measure shortly, raising hopes that normal IRS operations could resume within days.
2. IRS Workforce Strained, but Bipartisan Deal May Help — Approximately 40,000 IRS employees have continued working under Inflation Reduction Act funding, but morale and productivity have been strained by inconsistent guidance and unpaid status. Union representatives have described widespread anxiety among staff at service centers.
The Senate’s funding deal would stabilize operations, reinstate furloughed employees, and provide greater certainty ahead of the 2026 filing season, key steps for maintaining refund momentum.
3. Justice Department Reorganization Delayed — The federal shutdown has also delayed the Justice Department’s plan to dissolve its Tax Division and redistribute civil and criminal tax enforcement responsibilities. Tax attorney Joshua Wu is expected to lead the new civil tax branch once the transition resumes.
The delay, coupled with limited staffing at IRS and DOJ, may temporarily slow enforcement actions, including those related to ERC claims.
TaxNow's Take:
Although the shutdown has disrupted much of the federal government, the IRS’s continued refund activity offers clear evidence that progress is still being made to clear the ERC backlog by year-end. The steady mix of both newer and older filings being paid suggests that operations, though slower, are functioning across multiple internal workstreams.
With the Senate deal advancing and growing confidence that the shutdown may soon end, the outlook for the remainder of the year is improving. The IRS’s ability to keep refund processing active during this period speaks to both resilience and a renewed focus on clearing the backlog.
For businesses awaiting ERC refunds, the message this week is cautiously positive: processing is still moving, the system remains operational, and a full return to normal activity now appears within reach.
Signing off!
Kenny Dettman, CPA
Disclaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 14,000 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
