ERC Disallowance, Withdrawal, and the Form 907 Extension Path

Letter 105-C is the IRS notice that your Employee Retention Credit claim has been denied. The IRS newsroom announcement covering the new Form 907 process names both letter types together: "When an ERC claim is disallowed by the IRS, taxpayers receive a Letter 105-C or 106-C."^[5] The same announcement gives you a clear timeline once that letter arrives: "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."^[5]

If you disagree with the denial, the IRS lays out the options on the main ERC page: "If the IRS disallowed your ERC claim with Letter 105-C and you disagree, you may request an administrative appeal, review by the IRS Independent Office of Appeals, or file suit."^[1]

Withdrawal is a separate path from appeal, and it has tighter eligibility. The ERC main page describes who can use it: "You can use this program if your ERC hasn't been paid yet, or if you already received a check for ERC but haven't cashed or deposited it."^[1]

Once a payment clears, or once you have received the disallowance letter for a given tax period, withdrawal closes for that period. The Letter 105-C guidance is direct: "If you received Letter 105-C, you're not eligible for the claim withdrawal program for the tax periods covered in the letter."^[2] You could still be eligible to withdraw a claim for other tax periods that have not been processed or denied. Ongoing employment tax filings are handled inside payroll services so the next return is clean.

In April 2026 the IRS announced a streamlined way for taxpayers running out of time after a disallowance to keep their refund-suit window open. The newsroom announcement names the form and the eligibility window: "submit Form 907 requesting an extension via the IRS Document Upload Tool"^[7] is now an option for taxpayers who meet both of two conditions described in the same announcement, including that "The taxpayer has six months or less remaining before their two-year period expires."^[8]

The Letter 105-C guidance describes the underlying mechanic: "extend the time to file suit by written agreement (Form 907, Agreement to Extend the Time to Bring Suit PDF), which needs to done before the two-year period expires."^[2] The Document Upload Tool simply makes the submission faster than mailing the form.

The ERC is bounded by specific dates. The Letter 105-C guidance notes the credit "is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and Dec. 31, 2021."^[9] The IRS FAQ confirms the same window and adds the form mechanic: "businesses that file quarterly employment tax returns can file Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund PDF, to claim the credit for prior 2020 and 2021 quarters."^[3]

Form 941-X is the same amended return used for any other 941 correction. The IRS about page describes its general purpose: "Use Form 941-X to correct errors on a Form 941 that you previously filed."^[6] If your business filed a Form 941-X to claim the ERC, that is the return at issue when the IRS sends Letter 105-C.

Miami restaurants, construction crews, and small service businesses claimed the ERC in large numbers when the windows were open. Many of those claims are now in audit, partial-disallowance, or pending status, and the two-year clock from the disallowance letter is what determines whether the refund stays alive.

An Enrolled Agent response handles the packaging end to end: assembling eligibility documentation, computing the credit by quarter, drafting the protest, and watching the calendar. The matched income-tax return work travels alongside the response through business tax return preparation, since the ERC interacts with the wage deduction. For tax services for restaurants and food service operators specifically, the protest is coordinated with current payroll filings to keep the next quarter clean. For non-resident family members involved in the business who need a US tax ID, see our ITIN application guide for Miami filers guide.