📉 Despite another minor week-over-week dip, refund processing remains at a respectable level. Unlike the stock-market over the past several weeks, the ERC “refund market” continues to observe low volatility, with a modest decline from last week of 578 total refunds compared to 706 – representing an 18% week-over-week drop.
📈 This trend of low volatility also persists across average refund size, with a much welcome week-over-week increase, the first we’ve ween in over a month. This week's average refund amount of $104,712 increased over last week's $98,810 – a commendable 6% week-over-week incline.
1. The Official “End of the ERC” Concludes: Last Tuesday, April 15, was a significant date for ERC claimants—it not only marked the final day the IRS would accept Form 941 or 941-X for the 2021 tax year, but also the Assessment Statute Expiration Date (ASED), which is the last day the IRS can assess taxes on a timely filed Form 941 (with Q321 and Q421 subject to an additional 2-year ASED). There remains confusion about what this means for the audit risk of Employee Retention Credit (ERC) claims going forward. It’s important to understand that if a claim has not yet been processed, the ASED does not protect the taxpayer, because no tax has been assessed—there’s no determination yet regarding underpayment of employer Social Security or Medicare taxes. As a result, pending ERC claims remain fully subject to IRS review, including examination or denial under standard 105C procedures. Additionally, claimants should be aware of the 2-year “ERSED” (Erroneous Refund Statute Expiration Date). This statute allows the IRS to reclaim an issued ERC refund within two years from the date it was disbursed, meaning the risk of clawback remains even after a refund is received.
2. The IRS Commissioner Carousel Continues: Gary Shapley, the IRS whistleblower known for his testimony regarding the Hunter Biden tax investigation, was removed from his position as acting IRS commissioner just days after his appointment in April 2025. His abrupt ousting followed objections from Treasury Secretary Scott Bessent, who was reportedly unaware of Shapley's appointment, which was allegedly influenced by Elon Musk's Department of Government Efficiency. Shapley was replaced by Deputy Treasury Secretary Michael Faulkender, marking the IRS's fourth leadership change since President Trump's second term began!
3. Tax Bill Continues to Push Forward: After narrowly approving the budget framework on April 10, lawmakers are jockeying to include or exclude key provision in the tax bill, mostly behind closed doors. House Speaker Mike Johnson indicated that increasing taxes on the wealthiest Americans is not expected to be part of the GOP's forthcoming legislation. House republicans also assert they “cannot and will not support a final reconciliation bill that includes any reduction in Medicaid coverage for vulnerable populations.” The House Natural Resources Committee plans to review its portion of the legislative package on May 6, focusing on energy policies and resource development. The proposed legislation aims to extend existing tax cuts, introduce new tax relief measures, and implement spending reductions, with a target completion date by Memorial Day.
4. Billy Long's Campaign Contributions under Fire: IRS Commissioner nominee Billy Long continues to face media scrutiny as recent reports reveal that campaign contributions used to repay outstanding loans are linked to companies he previously referred to for both ERC claims and sovereign tribal tax credit opportunities.
Kenny's Conclusions
Despite widespread unrest within the IRS at all levels, ERC processing appears relatively stable for claims the agency has classified as low-risk. However, a vast number of claims filed in early to mid-2023 remain completely stagnant. It remains unclear and the IRS has provided no formal guidance on how it is currently applying or adjusting its risk-scoring methodology to decide which claims to process and which to deprioritize, effectively leaving many in limbo with no apparent resolution strategy.
Until next week…
Disclaimer: *𝘋𝘢𝘵𝘢 𝘴𝘦𝘵 𝘪𝘴 𝘧𝘳𝘰𝘮 𝘢𝘱𝘱𝘳𝘰𝘹𝘪𝘮𝘢𝘵𝘦𝘭𝘺 10,000 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘳𝘢𝘤𝘬𝘪𝘯𝘨 𝘌𝘙𝘊*
