ERC Disallowance Form 907 Extension: New IRS Streamlined Process 2026
If you received an ERC disallowance notice on Letter 105-C or 106-C and you’re approaching the two-year statutory deadline to file a refund suit, the IRS just opened a faster path to extend that clock. The new ERC disallowance Form 907 streamlined process — announced in IR-2026-58 on April 27, 2026 — lets eligible taxpayers electronically submit Form 907 (Agreement to Extend the Time to Bring Suit) through the IRS Document Upload Tool, without having to navigate paper-mail timing risks.
At SW Accounting & Consulting Corp, we work with employers whose ERC claims are stuck in IRS review or disallowed. This guide explains exactly who qualifies, how to file Form 907 electronically, and what the strategic considerations are at this stage of the ERC dispute lifecycle.
What is the 2-year ERC refund suit deadline? ⏱
When the IRS disallows an ERC claim via Letter 105-C (full disallowance) or Letter 106-C (partial disallowance), the taxpayer has two years from the date of that letter to either resolve the claim administratively or file a refund suit in federal court.
Critical mechanics:
- Letter 105-C — full disallowance of the ERC claim.
- Letter 106-C — partial disallowance.
- The 2-year clock runs from the date of the letter, not from when you respond.
- Filing a protest with IRS Independent Office of Appeals does NOT extend the 2-year deadline. If the deadline passes while you’re still in Appeals, you lose your refund-litigation rights.
- After 2 years, the IRS cannot issue a refund even if it later decides in your favor.
Many taxpayers and even some practitioners assume that Appeals review pauses the 2-year clock. It does not. We’ve seen ERC claimants in active Appeals dialogue lose their litigation right because no one was tracking the original 105-C/106-C letter date. If you have ERC disputes in process, calendar the 2-year deadline immediately.
How does the new Form 907 streamlined process work? 📋
Eligible taxpayers can submit Form 907 (Agreement to Extend the Time to Bring Suit) via the IRS Document Upload Tool at IRS.gov/DUTReply by selecting notice “CP320B” from the drop-down — replacing slower paper mail.
| Step | Action |
|---|---|
| 1. Confirm eligibility | You’re awaiting IRS consideration of your response to Letter 105-C or 106-C, AND you have ≤ 6 months remaining before the 2-year deadline. |
| 2. Complete Form 907 | “Agreement to Extend the Time to Bring Suit” — fully execute (taxpayer signature + space for IRS countersignature). |
| 3. Submit via DUT | Go to IRS.gov/DUTReply, select notice “CP320B” from the dropdown, upload the executed Form 907. |
| 4. Wait for countersignature | IRS reviews the request and sends a written response. If approved, the countersigned Form 907 is returned to you or your authorized representative. |
| 5. Track new deadline | Calendar the extended deadline. The Form 907 specifies the new date by which you must file suit if administrative resolution fails. |
The IRS is sending Notice CP320B to taxpayers it has identified as eligible — but eligibility does not require receiving the notice. If you believe you meet the criteria (response pending + ≤ 6 months remaining), you can still submit. Step-by-step instructions are at IRS.gov/CP320B, IRS.gov/erc105c, and IRS.gov/erc106c.
Who is eligible for the streamlined Form 907 submission? ✅
You qualify if BOTH of the following are true: (1) you are waiting for the IRS to consider your response to a Letter 105-C or 106-C ERC disallowance, AND (2) you have six months or less remaining before your 2-year refund suit deadline expires.
If only one of those conditions is met — for example, you have more than 6 months remaining, or your dispute is not on a 105-C/106-C letter — you must use the IRS’s normal Form 907 process (paper submission to the appropriate IRS office) rather than the streamlined DUT pathway.
What does Form 907 actually do? 🔍
Form 907 is a written agreement between the taxpayer and the IRS that extends the statutory period during which the taxpayer can file a refund suit and the IRS can administratively reconsider the disallowance.
Strategic effects:
- Preserves litigation rights. Without the extension, missing the 2-year deadline forfeits your ability to sue for refund regardless of the merits.
- Buys administrative time. Allows the IRS Independent Office of Appeals or Examination team to fully consider your response without the looming forced-filing deadline.
- Doesn’t waive any positions. Submitting Form 907 does not concede the disallowance is correct; it simply preserves both parties’ time to negotiate or litigate.
- Mutual signature required. Form 907 is only effective when both you and the IRS sign before the original 2-year deadline.
In our practice, we typically file Form 907 when (1) the substantive merits of the ERC claim are strong, (2) the IRS is in active dialogue but unlikely to resolve before the deadline, and (3) the cost of refund litigation is meaningful relative to the claim. If your claim is small and the merits are weak, paying the cost of full litigation may not make sense — in those cases, an administrative offer in compromise or accepting the disallowance and moving forward may be the right call.
What if you didn’t receive Notice CP320B? 📬
You can still submit Form 907 through the streamlined process even if you didn’t receive Notice CP320B — provided you meet the dual eligibility criteria.
The IRS proactively identifies and notifies eligible taxpayers, but the dataset isn’t perfect. If your records show:
- A Letter 105-C or 106-C disallowance,
- A formal taxpayer response (protest, written reply, Appeals submission) currently being considered,
- Six months or less remaining on the 2-year clock,
…then you qualify regardless of whether CP320B arrived. Self-prepare Form 907, log into IRS.gov/DUTReply, select CP320B from the dropdown menu, and upload.
Frequently Asked Questions 🗂
For the IRS announcement, see IR-2026-58 on IRS.gov. Step-by-step Form 907 submission instructions are at IRS.gov/erc105c and IRS.gov/erc106c. The IRS Document Upload Tool entry point is IRS.gov/DUTReply.
Need help responding to an ERC disallowance, evaluating litigation options, or filing Form 907? SW Accounting & Consulting Corp’s tax controversy team handles ERC disputes — book a consultation.
