The IRS has created a formal mechanism for Employee Retention Credit claimants to extend the two-year deadline to file a refund suit after a claim disallowance. The tool is Form 907, Agreement to Extend the Time to Bring Suit. The submission route is the IRS Document Upload Tool, with instructions provided in CP320B guidance. Eligibility is limited to taxpayers who have six months or fewer remaining on their two-year clock.
This is not a minor procedural update. For practitioners with ERC clients sitting on disallowance letters, it may be the most consequential deadline management development since the IRS resumed processing claims.
Understanding the Problem
When the IRS disallows an ERC claim, it issues Letter 105-C for a full disallowance or Letter 106-C for a partial disallowance. Under IRC Section 6532(a), taxpayers have two years from the date of that letter to file a refund suit in U.S. District Court or the U.S. Court of Federal Claims.
Filing a protest with the IRS Independent Office of Appeals does not stop that clock. An open Appeals docket does not stop it. A pending response to the disallowance does not stop it. Only a countersigned Form 907 or a filed refund suit suspends the deadline. When the two years expire, the right to a refund is permanently lost.
The IRS had approximately 41,000 unresolved ERC cases in inventory as of mid-2025, according to the Government Accountability Office. More disallowance notices are being issued. Many of those cases are now inside or approaching the six-month window. The April 27 announcement is a direct acknowledgment that Appeals cannot work through the inventory fast enough to protect claimants within the existing deadline structure.
What Form 907 Does and Does Not Do
A countersigned Form 907 gives the IRS additional time to consider the disallowance and gives the taxpayer additional time to file suit if the case does not resolve. It buys time. It does not change the merits of the underlying claim, and it does not guarantee approval. The IRS must countersign the agreement before the two-year deadline for the extension to be valid. Submission alone does not protect the client.
Practitioners should also note that eligibility requires two conditions: the taxpayer must be waiting for the IRS to consider their response to a 105-C or 106-C disallowance, and six months or fewer must remain on the two-year period.
What Practitioners Should Do Immediately
Run a report across every ERC client with a 105-C or 106-C disallowance letter. Sort by letter date and flag every file where the two-year deadline falls on or before October 27, 2026. Those files are inside the six-month window today.
For each flagged file, confirm that a response to the disallowance is pending IRS consideration. Verify that Form 2848 authority is current, because countersigned Forms 907 are routed to the authorized representative on file. A stale power of attorney can send the document to the wrong address and cost critical time.
Prepare and submit Form 907 through the IRS Document Upload Tool following the CP320B instructions. Document the submission date and confirmation number. Calendar a 60-day follow-up to confirm countersignature status.
For any file where the two-year deadline falls within 90 days, draft the contingency complaint now. The Form 907 channel is a valuable tool, but it is not a guarantee. If the IRS does not countersign in time, the client needs the option to file suit on short notice.
The IRS has created a more accessible pathway. Whether it works depends entirely on whether practitioners use it before the window closes.
Dr. Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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