What This Notice Means

The CP320B deals with the deadline to sue after the IRS disallows an Employee Retention Credit (ERC) claim. You generally have two years from the date of the disallowance letter, such as Letter 105-C or 106-C, to file suit for the refund or credit.

Here is the part that catches people. Requesting an appeal does not stop that 2-year clock. If you don't file suit or sign a written extension before the period expires, the IRS cannot issue the refund or credit. That is true even if Appeals later decides in your favor.

How to Protect Your Claim

You have two options before the 2-year period ends:

  • Sign Form 907, Agreement to Extend the Time to Bring Suit, with the IRS, or
  • File suit in the U.S. District Court with jurisdiction or the U.S. Court of Federal Claims.

If you responded to an ERC disallowance, you're still waiting on an answer, and less than 6 months remain in the 2-year period, you can request the extension this way:

  • Complete every field on Form 907 and sign it.
  • Submit it through the IRS Document Upload Tool.
  • Wait for the IRS to return a countersigned copy.

The extension isn't valid until the IRS signs it. Both parties must sign before the 2-year period expires. If your deadline is close, call the number on your latest notice right away.

Mistakes That Delay Form 907

Incomplete forms get delayed or denied. Fill in the taxpayer ID number, name, address, expiration date, period ended (the last day of the quarter, such as 03/31/2021), kind of tax (Employment), amount of tax (the refund claim amount), and the date on your Letter 105-C or 106-C. That date is usually in the top right corner of the letter. Include every required signature and date.

Who Signs

For a corporation, an authorized officer signs with the corporate name, signature, and title. A representative can sign only if a Form 2848 specifically authorizes it, with a copy attached. A fiduciary should attach Form 56 if one isn't already on file.

If your ERC claim was denied and the clock is running, call us at (813) 229-7100. We handle refund claims and the deadlines that go with them.