IRS Announces New Streamlined Process to Extend ERC Claim Deadlines — Here's What You Need to Know About Form 907

The information provided here is for general informational purposes only and should not be construed as tax or legal advice. Tax laws and IRS procedures are complex and subject to change. If you have questions about your specific situation, including whether you qualify for relief or how to respond to an IRS notice, consult with a qualified tax professional or attorney before taking action.

On April 27, 2026, the Internal Revenue Service 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. This announcement, released as IR-2026-58, marks a significant change for the tens of thousands of businesses and taxpayers still fighting ERC disallowances—and it comes with a strict six‑month eligibility window.

If your business claimed the Employee Retention Credit during the pandemic, received a notice denying or partially denying that claim, and submitted a response that's still pending with the IRS or Appeals, you may be approaching a critical deadline that could cost you the right to a refund—even if your claim is valid. The new process is designed to address that risk, but only if you act quickly.

What Is the ERC—and Why Are So Many Claims Being Denied?

The Employee Retention Credit was a refundable tax credit for certain eligible businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. The credit is available to eligible employers that paid qualified wages to some or all employees after March 12, 2020, and before January 1, 2022, and employers can claim the ERC on an original or adjusted employment tax return for a period within those dates.

The IRS is concerned about a large number of improper ERC claims and is closely reviewing tax returns that claim the credit. In the summer of 2024, the IRS issued approximately 28,000 disallowance notices, many based on the results of risk filter analyses rather than a prior examination. According to the Government Accountability Office's February 2026 report, the IRS had processed nearly 5 million ERC claims as of June 2025, resulting in approximately $283 billion in reduced tax liabilities and refunds.

Many of the denials were issued before the IRS performed a full examination of the claim. Instead, claims were flagged by automated risk filters, and taxpayers had to protest the denial to get their case reviewed. Taxpayers responded to these disallowances by filing protests and expecting prompt review by Appeals, but instead, many of these cases were routed to IRS Compliance for initial review because no examination had previously occurred. That rerouting has created a backlog—and a time bomb.

The Two‑Year Deadline That Can Cost You Everything

Here's the trap that many business owners don't see coming: when an ERC claim is disallowed by the IRS, taxpayers receive a Letter 105-C or 106-C, and 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.

The problem? 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.

This deadline is governed by Internal Revenue Code Section 6532, which provides that the taxpayer has two years from the date of the notice of claim disallowance in which to bring suit. Even worse, IRC Section 6514(a)(2) prohibits the IRS from issuing a refund after the two-year period for filing a refund suit expires, unless the taxpayer has brought a timely suit.

As National Taxpayer Advocate Erin Collins put it, "If the deadline expires, the consequences are severe: the taxpayer loses the right to file suit in federal court, and the IRS is barred from issuing the refund, even if the claim is otherwise valid. This is not a technicality—it is a significant and often overlooked risk that can permanently deprive taxpayers of relief Congress intended for them to receive."

Think about that: you could win your appeal, prove your claim was valid, and still never see a dime if the two‑year clock ran out before the IRS finished processing your case.

Why Filing a Protest or Going to Appeals Doesn't Stop the Clock

One of the most dangerous misconceptions is that working with the IRS administratively—filing a protest, responding to the denial, or even having an open Appeals case—pauses the two‑year deadline. It does not.

As the National Taxpayer Advocate has previously observed, "taxpayers should not assume that administratively working with the IRS, filing a protest, or meeting with an Appeals Officer will protect their refund rights. Once the statutory deadline passes, those rights are gone—it's game over."

This issue is especially critical given how long it takes cases to move through the IRS. In fiscal year 2025, the average time from the initial taxpayer request for an appeal to resolution of all cases—not just ERC cases—including both IRS Compliance and Appeals review, was 337 days. In practice, that means a significant portion of the two-year period can be consumed while the case is still working its way through administrative channels.

And that's the average for all cases. ERC disputes—particularly those that were first disallowed by a risk filter rather than a full audit—often take even longer because they require substantive review of eligibility, qualified wages, and documentation that the IRS didn't evaluate the first time.

The New Streamlined Process: Form 907 and Notice CP320B

The April 27 announcement introduces a new, structured way for certain ERC claimants to request additional time via Form 907, Agreement to Extend the Time to Bring Suit, which the IRS and a taxpayer can sign to extend the time to file suit 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.

Form 907 has always existed, but historically there was no standard procedure to request or submit it, and many practitioners were unfamiliar with it. What changed on April 27 is access. The IRS created an ERC-specific channel with defined eligibility, structured submission and a commitment to process the requests.

Who Is Eligible?

The IRS 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 if they meet both of the following conditions: (1) The taxpayer is waiting for the IRS to consider their response to the notice of disallowance on Letter 105-C or 106-C, and (2) The taxpayer has six months or less remaining before their two-year period expires.

If you meet both conditions, you're eligible to use this new streamlined channel.

How Does It Work?

Shortly after April 27, 2026, the IRS will send Notice CP320B, Important Reminder Regarding Your Disallowed Employee Retention Credit (ERC) Claim, to taxpayers who submitted a response after the IRS disallowed their ERC claim, and whose cases have six months or less remaining on the two-year period.

These new notices alert taxpayers to the approaching deadline and direct them to complete a Form 907, Agreement to Extend the Time to Bring Suit. This form, once signed by both the taxpayer and the IRS, extends the time to file a refund suit or receive payment. The notice includes a QR code linking to a fillable Form 907 that the taxpayer can print, sign, and electronically submit via the IRS Document Upload Tool (DUT).

Starting on April 27, 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.

What If You Haven't Received CP320B Yet?

The IRS said it is sending Notice CP320B to taxpayers identified as eligible for this new Form 907 submission method. But if you meet the eligibility criteria and have not yet received CP320B, taxpayers may still submit Form 907. For instructions, visit the IRS page "Understanding Letter 105-C, Disallowance of the Employee Retention Credit (ERC)".

You can find Form 907 on IRS.gov. The form itself is short—essentially an agreement between you and the IRS to extend the time limit for filing a refund lawsuit. But the form must be countersigned by the IRS to be valid, and a valid extension exists only when the IRS countersigns the agreement before the two-year date. Submission alone does not protect the client.

Important Limitations and Warnings

This Process Is ERC‑Specific Only

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. This streamlined channel applies only to ERC claim denials.

The IRS Can Refuse to Sign

Form 907 is a bilateral agreement. The IRS can refuse. The IRS has said properly executed forms will be given due consideration, which is not a guarantee. If the IRS does not countersign before the two-year date, the deadline is not extended.

The Extension Doesn't Fix a Weak Claim

A Form 907 buys time. It does not improve a weak ERC eligibility position. The extension period should be used to strengthen the administrative record on governmental order analysis, gross receipts decline documentation, aggregation and supply chain disruption substantiation.

If your underlying ERC claim was filed without proper documentation or doesn't meet the eligibility criteria, an extension won't change that. Use the extra time to work with a qualified tax professional to shore up your case, gather documentation, and respond substantively to the IRS's concerns.

You May Need to File Suit Anyway

If your two-year deadline is less than 30 days away, you may not have time to wait for the IRS to countersign Form 907. Clients with less than 30 days remaining are in a different posture and should be evaluated for immediate suit filing in parallel with the Form 907 submission.

That means preparing and filing a refund lawsuit in U.S. District Court or the U.S. Court of Federal Claims. This is expensive, time-consuming, and technical—but it may be the only way to preserve your right to a refund if the clock is nearly out.

What to Do Right Now If You Have a Pending ERC Disallowance

If you filed an ERC claim and received Letter 105-C (full disallowance) or Letter 106-C (partial disallowance), here's what you need to do immediately:

Step 1: Find Your Disallowance Letter and Calculate Your Deadline

Look for Letter 105-C or Letter 106-C. 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 two-year clock starts on the date the IRS mailed that letter. Count forward two years from that date. If your deadline is on or before October 27, 2026, you are inside the six-month eligibility window today.

Step 2: Confirm You Submitted a Response

The new process is only available if you submitted a response to the disallowance—a protest, additional documentation, or a request for reconsideration—and that response is still pending with the IRS or Appeals. If you never responded to the denial, Form 907 under this channel may not apply.

Step 3: Watch for Notice CP320B

If you meet the criteria, the IRS should be sending you Notice CP320B with instructions and a QR code to access a fillable Form 907. Follow those instructions carefully. When completing Form 907, adhere strictly to the instructions provided in the notice. Even minor errors can delay processing and jeopardize timely execution.

Step 4: Submit Form 907 via the Document Upload Tool

Use the IRS Document Upload Tool and select CP320B from the notice drop-down. Submit your signed Form 907 electronically. Keep a copy of the confirmation and document everything.

Step 5: Check Your Power of Attorney

If you have a representative (CPA, EA, or attorney), make sure your Form 2848 (Power of Attorney) is current and on file with the IRS. Countersigned Forms 907 will be sent to taxpayers or their authorized representative, so if your POA is outdated or the address is wrong, you may not receive the executed form in time.

Also, note that a signed Form 2848, Power of Attorney, is not sufficient to authorize a taxpayer's representative to sign Form 907, unless language is added to Form 2848 that would encompass such authorization. If your representative is signing Form 907 on your behalf, confirm the POA language covers that authority.

Step 6: Calendar a Follow‑Up in 60 Days

You should receive a response from the IRS after they review your Form 907. If 60 days pass and you haven't received a countersigned copy or a denial, follow up immediately. The deadline doesn't pause just because you submitted the form.

Step 7: Consult Legal Counsel If Time Is Running Out

If you have fewer than 90 days remaining on your two-year deadline and you haven't heard anything from the IRS, or if the IRS refuses to sign Form 907, you need to speak with a tax attorney immediately about filing a refund lawsuit. Once the deadline passes, your rights are gone.

How Wynn Tax Solutions Can Help

At Wynn Tax Solutions, we work with businesses and individuals who are fighting IRS disallowances, audits, and collection actions—including ERC disputes. If you filed for the Employee Retention Credit and the IRS denied your claim, we can help you:

• Review the denial letter and calculate your deadline under IRC Section 6532
• Determine whether you're eligible for the new Form 907 extension process
• Prepare and submit Form 907 via the IRS Document Upload Tool
• Strengthen your administrative record with additional documentation and substantiation
• Coordinate with legal counsel if a refund lawsuit becomes necessary
• Work with IRS Appeals to resolve your case before the deadline expires

If you received Letter 105-C or Letter 106-C and you're approaching the two-year deadline, time is critical. Even if you filed a protest or your case is already with Appeals, the clock is still ticking—and once it runs out, the IRS is prohibited by law from issuing a refund, even if you win.

We've guided clients through complex IRS disputes involving ERCs, payroll tax credits, refund claims, and administrative appeals. We understand the procedural traps, the documentation requirements, and the timing issues that can make or break your case. And we know how to work efficiently when deadlines are tight.

Final Thoughts: This Is a Narrow Window, and It Won't Stay Open

The April 27 announcement is good news for taxpayers who have been caught in the ERC appeals backlog. For the first time, there's a clear, structured process to request an extension of the two-year refund suit deadline—something that was previously difficult to access and poorly understood.

But this isn't a safety net you can rely on indefinitely. The eligibility window is six months or less remaining on your deadline. If you're outside that window, you can't use this process yet. If you're inside the window and you don't act, you could lose your right to a refund worth tens or even hundreds of thousands of dollars.

Generally, the Form 907 extension is no longer than two years in length and can be renegotiated if additional time is needed, but you have to get the first extension signed before your original deadline expires. Miss that, and it's over.

The IRS has acknowledged that "a meaningful number of ERC claimants are about to lose refund rights because Appeals cannot work the inventory fast enough". That's why this process exists. Don't let your case be one of them.

Bottom line: If you claimed the Employee Retention Credit, received Letter 105-C or 106-C denying or partially denying your claim, and submitted a protest or response that's still pending, check your deadline immediately. If you have six months or less remaining, you may be eligible for the IRS's new streamlined Form 907 extension process announced April 27, 2026. Submit Form 907 via the IRS Document Upload Tool, confirm your Power of Attorney is current, and document everything. If your deadline is fewer than 90 days away and you haven't received a countersigned Form 907, consult a tax attorney about filing a refund lawsuit. Once the two-year clock under IRC Section 6532 runs out, the IRS is legally barred from issuing your refund—even if your claim is valid. Time is the one thing you can't get back.