New Option for Businesses with Denied ERC Claims

What Happened

The IRS has introduced a simpler way for certain businesses to request additional time to resolve denied Employee Retention Credit (ERC) claims, potentially avoiding the need to go to court.

Background

If the IRS denied your ERC claim, you received either a Letter 105-C (full disallowance) or a Letter 106-C (partial disallowance). From the date of that letter, you generally have two years to either settle the matter with the IRS administratively or file a lawsuit in federal court. Critically, even appealing to the IRS’s Independent Office of Appeals does not pause or extend this two-year clock.

Once that window closes, the IRS is legally barred from issuing you a refund, even if it later determines you were right.

What’s New

Starting April 27, 2026, eligible taxpayers can submit Form 907 (Agreement to Extend the Time to Bring Suit) electronically through the IRS Document Upload Tool. This gives both you and the IRS more time to work through the dispute without rushing to litigation.

You may be eligible if both of the following apply:

• You are still waiting for the IRS to review your response to a Letter 105-C or 106-C denial, and
• You have six months or less remaining on your two-year deadline.

How to Request an Extension:

1. Go to IRS.gov/DUTReply
2. Select notice “CP320B” from the drop-down menu
3. Submit your completed Form 907

The IRS will review your request and notify you in writing whether it has agreed to the extension.

Note: The IRS is proactively mailing Notice CP320B to taxpayers it has identified as potentially eligible. However, you do not need to receive this notice to apply, if you believe you meet the criteria, you can still submit Form 907 using the steps above.

For more information, visit IRS.gov/CP320B, IRS.gov/erc105c, or IRS.gov/erc106c.

Bottom Line

If your ERC claim was denied and your two-year appeal window is running out, act quickly. This new streamlined process gives you a meaningful opportunity to keep your options open without immediately resorting to federal litigation. CTI can help you determine whether you qualify, confirm your deadline, guide you through the Form 907 submission process, and represent you through the appeals process if needed. Please reach out to our team so we can review your situation and take action before your deadline passes.

Source: IRS IR-2026-58 (April 27, 2026)