If the IRS has disallowed your refund claim, a two-year deadline started running the day that letter was dated — and filing an administrative appeal does not pause it. Worse, if the deadline passes while your case is still under review, the IRS is legally barred from paying you even if it later agrees you were right.
Form 907 is the fix. It is one page, it is unglamorous, and it only works if it is signed by both sides before the clock runs out.
Key takeaways
- IRS Letter 105-C (full disallowance) and Letter 106-C (partial disallowance) start a two-year period to file a refund suit under IRC § 6532(a)(1).
- Appealing does not extend that period. IRC § 6532(a)(3) says IRS consideration or reconsideration of the claim does not extend the time to sue.
- If the period lapses, the IRS cannot pay. Under IRC § 6514(a)(2), a refund made after the period expires is treated as erroneous and a credit as void.
- Form 907 extends the deadline by written agreement — but only once an authorized IRS employee countersigns it, and only if that happens before the original period expires.
- If the IRS won’t sign in time, a protective refund suit is the only backstop.
What is an IRS notice of claim disallowance?
When the IRS denies a refund claim — an amended return, a Form 843, an ERC claim on Form 941-X — it issues a notice of claim disallowance. In practice that means one of two letters:
- Letter 105-C, a full disallowance of the claim.
- Letter 106-C, a partial disallowance.
These letters are easy to underestimate. They arrive looking like routine correspondence, they often explain the denial in a few generic sentences, and nothing on the face of the letter announces that it has started a hard statutory clock.
How long do I have to sue for my refund after Letter 105-C?
Two years. Under IRC § 6532(a)(1), a taxpayer has two years from the mailing of the notice of claim disallowance to bring a refund suit in U.S. District Court or the U.S. Court of Federal Claims.
The statute measures the period from the date the notice is mailed by certified or registered mail. As a practical matter, calendar the date printed on the letter and treat it as day one. This is not a deadline to shave days off of.
Two related timing rules are worth knowing:
You do not have to wait for a disallowance to sue. Under the first part of § 6532(a)(1), a refund suit may generally be filed once six months have passed from the date the claim was filed, if the IRS has not acted. For taxpayers stuck in processing limbo with no answer at all, that is a live option.
You can start the two-year clock yourself. If you sign Form 2297, Waiver of Statutory Notification of Claim Disallowance, IRC § 6532(a)(4) runs the two years from the date of that waiver — no Letter 105-C required. Signing a Form 2297 to move a case along without calendaring the resulting deadline is a costly mistake.
Does filing an appeal stop the two-year clock?
No. This is the single most common misunderstanding in this area, and it is not a matter of IRS practice or discretion. It is written into the statute.
IRC § 6532(a)(3) provides that any consideration, reconsideration, or action by the IRS with respect to the claim following the mailing of the notice of disallowance does not operate to extend the period within which suit may be begun.
So the IRS Independent Office of Appeals can be actively working the file — requesting documents, holding conferences, sending letters — and the two-year period continues to run the entire time. Cooperating with the process does not buy time.
What happens if the deadline passes while my case is at Appeals?
This is where the trap closes.
Assume the two years expire while Appeals is still reviewing. Then Appeals concludes the taxpayer was right and the claim should be allowed. At that point, IRC § 6514(a)(2) applies: where a timely claim was disallowed and no suit was begun within the period of limitation for filing suit, a refund made after that period is considered erroneous and a credit is considered void.
The consequence is not that the IRS is reluctant to pay. It is that the IRS lacks the authority to pay. Chief Counsel has confirmed this position in written guidance (see, e.g., CCA 201549029). A favorable Appeals determination after the deadline has no cash value.
The National Taxpayer Advocate has identified this as a trap for unwary taxpayers — and the scale is not small. The IRS issued roughly 720,000 notices of claim disallowance in 2025.
What is Form 907?
Form 907, “Agreement to Extend the Time to Bring Suit” (current revision 7-2026), is the statutory release valve.
IRC § 6532(a)(2) allows the two-year period to be extended for such period as is agreed upon in writing between the taxpayer and the IRS. Form 907 is that written agreement. See also Treas. Reg. § 301.6532-1(b) and IRM 8.7.7.3.3.
Executing a Form 907 does two things at once:
- It preserves the right to file a refund suit later.
- It preserves the IRS’s authority to pay the refund administratively — because § 6514(a)(2) keys off “the period of limitation for filing suit,” and Form 907 moves that period.
Practical mechanics:
- An extension may run up to two years from the earliest expiring period listed on the form.
- Serial extensions are permitted. A second Form 907 can extend the period again, provided it is fully executed before the prior period expires.
- Authority to sign for the government is delegated to specified IRS personnel. It is not something an individual employee can grant informally.
Two rules that cannot be fudged
1. The agreement is not effective until the IRS signs. A taxpayer’s signature alone accomplishes nothing. A verbal assurance from an Appeals Officer accomplishes nothing. The agreement takes effect only when an authorized IRS employee signs on behalf of the Commissioner. Until the countersigned copy is in hand, the taxpayer is unprotected.
2. Both signatures must be in place before the deadline expires. An expired period cannot be revived. A Form 907 executed on day 731 is a nullity.
The practical constraint, then, is lead time. The form has to be submitted early enough that the IRS still has room to process and countersign it.
Five ways a Form 907 fails
1. The deadline was never calendared
The expiration date does not appear on the disallowance notice and does not appear on IRS account transcripts. If it was not diaried off the letter date, no system will surface it.
2. The power of attorney does not authorize the signature
To sign a Form 907 as a taxpayer’s representative, the Form 2848 must have Line 5a completed to specifically authorize signing that agreement. A standard power of attorney does not carry that authority. Fiduciaries must have a Form 56 on file, and corporate signatures must come from an officer authorized to sign in the corporate name.
3. The form is submitted incomplete
The IRS has identified missing fields as a leading cause of both delay and outright denial: taxpayer identification number, name, address, expiration date, period ended, kind of tax, amount, and the date the notice of disallowance was mailed (or the Form 2297 waiver filed). On this form, a blank box can cost the refund.
4. The underlying claim was never confirmed timely
Form 907 includes a representation that the listed claims were timely filed, and the Internal Revenue Manual instructs IRS personnel not to execute one until timeliness has been determined. Form 907 does not cure a claim that was untimely under IRC § 6511 to begin with.
5. Someone is relying on equitable tolling
Whether the deadlines in § 6532 are subject to equitable tolling after Boechler v. Commissioner remains contested. Even a favorable tolling ruling would address access to court — it would not restore the IRS’s administrative authority to issue the refund. Tolling is a litigation argument, not a plan.
Form 907 and ERC disallowances: Notice CP320B
Employee Retention Credit denials have made this issue urgent for a large number of businesses.
On April 27, 2026, the IRS announced a streamlined process for ERC claimants to extend the two-year period. A taxpayer may use it where both conditions are met:
- The taxpayer is awaiting IRS consideration of a response to a Letter 105-C or 106-C, and
- Six months or less remain in the two-year period.
Submissions are made through the IRS Document Upload Tool at IRS.gov/DUTReply, selecting notice “CP320B.” Eligible taxpayers are receiving Notice CP320B on a rolling basis with a QR code linking to a fillable Form 907, but eligibility does not depend on receiving the notice — the IRS has posted guidance at IRS.gov/erc105c and IRS.gov/erc106c. Countersigned forms are routed to the authorized representative on file.
Two limits worth stating plainly: a Form 907 concedes nothing on the merits, and it does not obligate the IRS to pay anything. It buys time to develop the administrative record.
What if the IRS will not sign the Form 907?
The backstop is a protective refund suit filed before the deadline.
IRC § 6514(a)(2) contains an express carve-out where suit was begun within the period, so filing preserves the claim. It also changes the posture of the matter: jurisdiction moves to a U.S. District Court or the Court of Federal Claims, the Department of Justice takes over from the IRS, and the case becomes litigation with litigation’s costs and timelines. Choice of forum matters, because the two courts sit under different appellate authority.
Filing suit is not a small step. But it is a decision that can be made. Allowing the date to pass is not.
Checklist for anyone holding a Letter 105-C or 106-C
- Calendar the letter date immediately. That is day one of two years.
- Do not assume an appeal freezes the clock. IRC § 6532(a)(3) says it does not.
- Confirm the Form 2848 has Line 5a completed before a signature is needed.
- Submit the Form 907 months in advance — and do not treat the matter as handled until the countersigned copy arrives.
- If the IRS will not sign in time, file a protective refund suit before the deadline.
Frequently asked questions
How long do I have to file a refund suit after receiving IRS Letter 105-C? Two years from the date the notice of claim disallowance was mailed, under IRC § 6532(a)(1).
Does appealing an IRS claim disallowance extend the two-year deadline? No. IRC § 6532(a)(3) provides that IRS consideration or reconsideration of the claim after the notice is mailed does not extend the period to file suit.
What happens if the two-year period expires while my case is at IRS Appeals? Under IRC § 6514(a)(2), a refund made after the period expires is treated as erroneous and a credit as void. The IRS cannot pay, even if Appeals agrees with the taxpayer.
Can the two-year deadline to file a refund suit be extended? Yes. IRC § 6532(a)(2) permits an extension by written agreement — Form 907 — signed by the taxpayer and an authorized IRS employee before the original period expires.
Is Form 907 effective when I sign it? No. It takes effect only when an authorized IRS employee countersigns on behalf of the Commissioner.
Who can sign Form 907 on a taxpayer’s behalf? The taxpayer, or a representative whose Form 2848 authorizes signing the agreement at Line 5a. Fiduciaries file Form 56; corporations sign through an authorized officer.
Can I file more than one Form 907? Yes. Serial extensions are permitted, provided each new agreement is executed before the prior period expires.
What is Notice CP320B? An IRS notice issued to eligible Employee Retention Credit claimants whose two-year period is nearing expiration, providing access to a streamlined Form 907 process announced April 27, 2026.
What if the IRS never issued a notice of disallowance on my claim? Under IRC § 6532(a)(1), a refund suit may generally be filed once six months have passed from the filing of the claim if the IRS has not acted.
This post does not constitute legal advice and does not create an attorney-client relationship; it is merely a general discussion of points of the law and may not be complete or up to date. Please contact our office for a consultation to discuss how tax laws may be relevant to your specific situation.