Tim’s Tax News on the Tenth – May 2026

The Internal Revenue Service recently announced a new, streamlined way for taxpayers to extend the period of time for the IRS and the IRS Independent Office of Appeals to review a taxpayer’s response to a disallowance of an Employee Retention Credit (“ERC”) claim to avoid refund litigation.

When an ERC claim is disallowed by the IRS, taxpayers receive a Letter 105-C or 106-C. These affected taxpayers generally have two years from the date of that letter to resolve their claim administratively or to file a refund suit in Federal court if they disagree with the IRS’s decision. Taxpayers may protest the IRS’s disallowance with the IRS Independent Office of Appeals, but that does not extend this statutory two-year deadline.

After the two-year period ends, the IRS cannot issue a refund, even if it later decides in the taxpayer’s favor after reviewing the disallowance. The deadline varies depending on the date of the original 105-C or 106-C letter.

The IRS acknowledges that it is aware that some taxpayers are approaching the end of this two-year period and is providing a new way for taxpayers to request more time to resolve their claims administratively or to file suit through the filing of Form 907, Agreement to Extend the Time to Bring Suit, if they meet both of the following conditions:

• The taxpayer is waiting for the IRS to consider their response to the notice of disallowance on Letter 105-C or 106-C, and
• The taxpayer has six months or less remaining before their two-year period expires.

Requesting More Time to File Suit or Resolve Claim Administratively

Under current law, the IRS and a taxpayer can agree in writing to extend the time to file suit if both parties sign Form 907 before the two-year period expires. A fully executed Form 907 gives the IRS more time to consider the disallowance administratively and gives the taxpayer more time to file suit, if needed.

Starting April 28, 2026, taxpayers with six months or less remaining in their time to file suit, and who are waiting for the IRS to consider their disallowance response to Letter 105-C or 106-C, may submit Form 907 requesting an extension via the IRS Document Upload Tool by going to IRS.gov/DUTReply and selecting notice ‘CP320B’ from the drop-down menu. Properly executed Forms 907 will be given due consideration by the IRS, and taxpayers will be informed in writing whether the IRS has agreed to the extension. Countersigned Forms 907 will be sent to taxpayers or their authorized representative. The IRS will not consider, as part of this tool, Forms 907 submitted for disallowances unrelated to Letters 105-C or 106-C, and taxpayers should submit these requests through the IRS’s normal processes.

The IRS is sending Notice CP320B to taxpayers identified as eligible for this new Form 907 submission method. Step-by-step instructions are available at IRS.gov/CP320B. Taxpayers may be eligible to extend the time even if they do not receive Notice CP320B. Step-by-step instructions are available at IRS.gov/erc105c and IRS.gov/erc106c for those who believe they meet the above-stated criteria, even if they did not receive a letter.

The IRS will continue processing ERC claims and appeals in accordance with its established procedures. This new streamlined process is intended to provide taxpayers with clear, timely information about their rights and available options, and thereby observing taxpayers’ rights. 

If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 32 years. If you have a tax or debt problem, please contact me at 847-705-9698 or thughes@lavellelaw.com and find out how we can help you.

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