📉 The past week brought another solid, but slightly declining output of ERC refunds. It would be great to see a nice steady plateau at this level, but we’ll see what next week has in store. Overall, we continue to see relatively low volatility, with a modest decline from last week of 599 total refunds compared to 714 – representing a 16% week-over-week drop.
📉 As for average refunds checks, it's difficult to ascertain whether a nicely shaped bell curve is forming, with April 7 potentially marking the peak week. We also saw a decline in this week's average refund amount with $100,678 compared to last week's $108,524 – a meager 7% week-over-week decline.
1. Massive Workforce Reduction at IRS: The IRS is set to reduce its workforce by up to 40%, aiming to decrease from approximately 100,000 employees to between 60,000 and 70,000. This includes about 22,000 employees who have accepted a deferred resignation buyout, 7,000 probationary workers terminated earlier this year, and up to 5,000 from a previous buyout round.
2. Congress Approves Budget Framework for Tax Reform: On April 10, 2025, Congress passed a budget resolution enabling Republicans to advance tax legislation through reconciliation, bypassing the Senate filibuster. Lawmakers are expected to begin drafting the tax bill after returning from recess on April 28, with initial legislative details anticipated in early May. At that time, we expect to gain clarity on whether any ERC-related provisions enter the bill (i.e., early termination or extended statute/promoter provisions).
3. Gary Shapley Named Acting IRS Commissioner: IRS whistleblower Gary Shapley, known for his role in the Hunter Biden tax case, has been appointed acting IRS Commissioner, replacing Melanie Krause amid leadership shifts.
4. Billy Long's Potential Ties to Tribal Tax Credits: IRS commissioner nominee Billy Long has disclosed financial connections to companies promoting "sovereign tribal tax credits," which the Treasury Department states are unauthorized and nonexistent. Senate Finance Committee Democrats have called for a criminal investigation into these schemes.
Kenny's Conclusions
It remains to be seen whether workforce reductions at the IRS and the carousel of interim IRS commissioners will meaningfully impact ERC processing. Furthermore, now that we are on the heels of the definitive drop-dead-date for ERC filings (e.g., April 15, 2025), we are also eager to see how ERC processing might be influenced, including the processing of 105C/106C denials.
Until next week…
Disclmaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 9,500 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
