IRS Offers "Streamlined" Option for Businesses with Denied ERC Claims

Businesses with denied Employee Retention Credit (ERC) claims now have a new “streamlined” option to preserve their rights with the Internal Revenue Service (IRS). Late last month, the IRS announced the new option and encouraged business owners and executives to take action if warranted. Learn what you need to know if the IRS has denied your business’s ERC claim from Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

Businesses Can Extend the Two-Year Deadline to Challenge Their ERC Denials

In response to widespread fraud under the ERC program, both during and after the COVID-19 pandemic, the IRS has taken an aggressive approach to denying pending claims. While many of these denied claims were fraudulent, the IRS has also denied valid claims.

Recognizing that this is the case, the IRS announced on April 27, 2026, that it is providing “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.” As a general rule, taxpayers have two years to protest the IRS’ disallowance of their claims. However, businesses that have valid ERC claims can now file IRS Form 907 (Agreement to Extend Time to Bring Suit) to prevent the two-year resolution deadline from expiring.

To qualify for an extension, a business must meet both of the following requirements:

• The business must be waiting for the IRS to consider its response to a notice of disallowance; and,
• The business must have six months or less remaining before the two-year deadline expires.

Filing IRS Form 907 (and having it accepted and countersigned by the IRS) allows businesses to continue to pursue an administrative resolution with the IRS or the IRS Independent Office of Appeals without losing their right to go to court if necessary. As the IRS explains, “[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.”

Key Considerations for Businesses with Denied ERC Claims

Business owners and executives facing denied ERC claims will need to make an informed decision about whether to request an extension. While doing so may be necessary to preserve their ability to secure a refund, it could also invite additional scrutiny from the IRS. As the IRS makes clear, “[p]roperly 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.” If additional scrutiny could lead to allegations of ERC fraud, it may be necessary to pursue other means of resolution instead.

Request an Appointment with Boston Tax Attorney Kevin E. Thorn

If you have questions or concerns about your business’s pending ERC claim(s), we invite you to get in touch. To request an appointment with Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 617-692-2989 or inquire online today.