IRS Offers New Extension for Businesses with Denied ERC Claims in 2026

The Internal Revenue Service (IRS) has announced a new extension for businesses seeking to challenge denials of their Employee Retention Credit (ERC) claims in 2026. While businesses generally have 2 years to file a refund lawsuit in court, the IRS is allowing eligible businesses to extend this deadline to continue pursuing an administrative resolution. Learn more from New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.

IRS Announces a “New, Streamlined Way” for Businesses to Preserve ERC-Related Claims

On April 27, 2026, the IRS announced a “new, streamlined way” for businesses to preserve their ability to pursue claims related to ERC denials. The IRS has denied a substantial number of ERC claims since the end of the COVID-19 pandemic, and while these denials are due to concerns about widespread ERC fraud, the IRS has denied valid claims as well.

As a general rule, businesses have two years to file a refund suit in federal court if they cannot obtain a satisfactory resolution through direct negotiations with the IRS or through the IRS’ Independent Office of Appeals. Now, however, eligible businesses can preserve their ability to file a refund suit beyond this two-year deadline—effectively extending the statute of limitations for seeking a judicial remedy.

To be eligible to request an extension, a business must:

• Be waiting for the IRS to consider its response to an ERC notice of disallowance; and,
• Have six months or less remaining under the standard two-year limitations period.

If a business meets both of these requirements—and it has a valid ERC claim—the business can file Form 907 (Agreement to Extend Time to Bring Suit) with the IRS. If the IRS accepts and countersigns the business’s Form 907, the business will have until the date stated on the form to file suit in federal court.

What if You Aren’t Sure Whether Your Business Has a Valid ERC Claim?

If the IRS has denied your business’s ERC claim and you aren’t sure whether your business’s claim is valid, determining its validity will be a key first step toward making informed decisions. The IRS and the U.S. Department of Justice (DOJ) are aggressively pursuing enforcement in cases of suspected ERC fraud, and businesses (and business owners and executives) convicted of ERC fraud can face steep penalties.

To ensure that you are making informed decisions, you should consult with an experienced New Jersey tax attorney promptly. An experienced tax attorney will be able to assess the validity of your business’s ERC claim (or claims) and then advise you regarding the options you have available.

Request a Confidential Consultation with New Jersey Tax Attorney Kevin E. Thorn

If you need to ensure you make informed decisions about how to handle your business’s outstanding ERC claim(s), we invite you to get in touch. Call us at 201-842-7696 or contact us online to request a confidential consultation with New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.