IRS Extends Time for ERC Claim Reviews
The Internal Revenue Service announced a new, streamlined process for taxpayers. This process extends the time to review Employee Retention Credit (ERC) claim disputes. It helps taxpayers avoid refund litigation.
Understanding Disallowance Letters
When the IRS disallows an ERC claim, taxpayers receive Letter 105-C or 106-C. Taxpayers usually have two years to resolve the issue. They can also file a refund suit in federal court. Taxpayers may appeal through the IRS Independent Office of Appeals. However, this appeal does not extend the two-year deadline.
Why the Deadline Matters
After the two-year period ends, the IRS cannot issue a refund. This applies even if the IRS later agrees with the taxpayer. The exact deadline depends on the original letter date.
New Option to Request More Time
The IRS recognizes that some taxpayers are nearing their deadlines. A new option allows taxpayers to request more time. This uses Form 907, Agreement to Extend the Time to Bring Suit. Taxpayers must meet two conditions to qualify. They must be waiting for the IRS to review their response. They must also have six months or less remaining.
How to Request an Extension
Current law allows written agreements to extend filing deadlines. Both the taxpayer and IRS must sign Form 907. The form must be signed before the deadline expires. A completed Form 907 gives both parties more time. The IRS gets more time to review the case. The taxpayer gets more time to file suit.
How to Submit Form 907
Eligible taxpayers can submit Form 907 using the IRS Document Upload Tool. Visit IRS.gov/DUTReply and select notice “CP320B.” The IRS will review submitted forms carefully. The IRS will notify taxpayers in writing about approval. Signed forms will be returned to taxpayers or their representatives. The IRS will not review unrelated Form 907 submissions through this tool.
IRS Notices and Instructions
Taxpayers may be eligible to extend the time even if they don’t 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.
Taxpayers who received an ERC claim disallowance notice and are unsure of their deadline should review the information provided on IRS.gov: Understanding Letter 105-C, Disallowance of the Employee Retention Credit or Letter 106-C, Claim Partially Disallowed. Those with additional questions should call the phone number listed on their most recent IRS notice.
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.
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