Following last week’s holiday-fueled slowdown, ERC refund volume rebounded slightly with 201 total refunds issued, a jump of +79 refunds week-over-week, but still meaningfully depressed compared to the significant spikes we saw during the government shutdown. While activity accelerated on a unit basis, total dollar volume fell materially to $30.7M, down $15.9M from last week’s $46.6M, which was driven by a significant decline in average refund size. This suggests a strong signal that smaller-dollar claims are back at the forefront of the processing queue.
On another positive note, several smaller-dollar claims in disguise are actually resolved IRS partial denials (e.g., Letter 106C).
On the enforcement front, full denials moderated to 47 this week (down 76 from last week’s 123), suggesting that last week’s OBBBA-related wave may have temporarily cleared through the system. However, audit activity ticked up ever so slightly, with 5 new audits opened in December, ending the recent streak of zero-audit weeks. It remains to be seen what “flavor” of audits will follow (e.g, field versus correspondence).
📈 Total Refunds: 201 (vs. 122 last week — up 79)
💵 Total Dollar Volume: $30.7M (vs. $46.6M last week — down $15.9M)
📉 Average Refund: $152,663 (vs. $381,831 last week — down $229,168)
📆 Average Days From Filing to Refund: 622 (vs. 624 last week — down 2 days)
📉 New Denials: 47 (vs. 123 last week — down 76)
🔍 New Audits: 5 (vs. 0 last week — up 5)
TaxNow's Take:
This week’s data highlights a clear pattern in what the IRS is choosing to process as we approach year-end. While refund volume surged, the collapse in average refund size confirms that smaller, less complex claims are now moving more freely, while larger legacy refunds continue to face resistance.
The sharp pullback in denials after last week’s spike suggests that OBBBA disallowance inventory may be clearing in waves rather than steadily. At the same time, the return of new audits, however small, confirms that enforcement remains an active, albeit selective, lever.
Signing off!
Kenny Dettman, CPA
Disclaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 15,000 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
