What the letter means
IRM 21.5.3.4.6.1: “Letter 105C, Claim Disallowed, is used for fully disallowed claims.” It is also used when a partial disallowance leaves a balance due or a zero balance; the Letter 106-C is reserved for partial disallowances that still produce a refund. The IRM requires that disallowance letters “are sent certified or registered mail and include a complete agency address,” and that they “must contain the specific reason for the disallowance of the claim for refund or request for abatement as well as the claim amount.” The explanation requirement is statutory: IRC 6402(l) says the IRS “shall provide the taxpayer with an explanation for such disallowance.”
The letter must also carry rights. IRM 21.5.3.4.6.1: “When disallowing claims for refund, the letter must include appeal rights and the right to file suit.” When the request was for abatement of unpaid tax rather than a refund, the letter uses a different paragraph telling the taxpayer that to sue they must first pay the tax and file a claim for refund within the IRC 6511 period. The Taxpayer Advocate Service describes the letter as the taxpayer's “legal notice that the IRS is not allowing the credit or refund they claimed.”
A claim, per IRM 21.5.3.2, is a request for refund or adjustment of tax paid, formal (a Form 1040-X or Form 843, or the business equivalents) or informal. Not every “no” from the IRS is a 105-C: math error corrections, IRS-initiated adjustments and tentative refund applications on Forms 1045 and 1139 are not claims and carry no claim disallowance rights.
Why the client got it
IRM 21.5.3.4.6 lists the paths to disallowance. The issue “is not allowable based on law or regulation.” The claim “is not filed timely” under IRC 6511, in which case the letter must state the received or postmark date and the date by which the claim should have been filed. Examination Classification reviewed the claim (CAT-A criteria) and directed disallowance in full or in part. The taxpayer asked in writing for an immediate notice of claim disallowance on an issue previously examined, which is a deliberate way to start the suit clock.
A different outcome is the “no consideration” letter, Letter 916C, used when a claim is incomplete, the taxpayer did not answer a request for missing information, or the time to sue on an earlier disallowance has already run (IRM 21.5.3.4.6.3). A 916C is not a disallowance and does not start the IRC 6532 period, which cuts both ways: no suit clock, but also no formal denial to appeal or sue on until the claim is perfected and acted on.
ERC claims are a large current source of 105-C letters; those have their own procedures in IRM 21.7.2 and are covered at ERC claim disallowance. Penalty refund claims on Form 843 are covered at refund claims for paid penalties.
The two-year clock and what stops it (nothing)
| Rule | Text | Source |
|---|---|---|
| Suit period | No suit “after the expiration of 2 years from the date of mailing by certified mail or registered mail by the Secretary to the taxpayer of a notice of the disallowance” | IRC 6532(a)(1) |
| Reconsideration | “Any consideration, reconsideration, or action by the Secretary with respect to such claim following the mailing of a notice ... shall not operate to extend the period within which suit may be begun.” | IRC 6532(a)(4) |
| Extension | “The 2-year period prescribed in paragraph (1) shall be extended for such period as may be agreed upon in writing” | IRC 6532(a)(2); Form 907 |
| Waiver of notice | Signed Form 2297 starts the 2 years on the date the waiver is filed | IRC 6532(a)(3); IRM 21.5.3.4.6.2 |
| Early suit | No suit before 6 months after the claim unless the IRS decides sooner | IRC 6532(a)(1) |
| Refund after the period | Barred unless a timely suit was filed | IRC 6514(a)(2) |
The IRM tells its own employees the same thing: “The 2-year period for bringing a refund suit begins on the date the IRS sends (by certified or registered mail) a notice of disallowance to the taxpayer, or on the date the IRS receives the taxpayer’s signed Form 2297, Waiver of Statutory Notification of Claim Disallowance, waiving the certified or registered mail requirement. Any reconsideration by the IRS does not extend the time for bringing suit.” And the consequence for Appeals: “If Appeals determines the IRC 6532 statute has expired and there isn’t a Form 907 in the case file, appeals cannot consider the case.” The TAS page puts the two years as the window to “request the IRS to reconsider the claim, request an appeal, or file suit,” and warns: “The IRS won’t inform you when this period is about to expire.”
The Appeals request date is shorter and is stated in the letter. IRM 21.5.3.4.6.2 tells phone assistors to “provide the 120-day appeal timeframe per the Independent Office of Appeals,” and separately says Appeals “typically contacts taxpayers within 120 days of receipt.” Whatever the letter's date for requesting Appeals, the two-year suit period is the one that cannot be recovered.
Form 907, Agreement to Extend the Time to Bring Suit, must be signed by both the taxpayer and the IRS before the two years run. If a client's claim is in Appeals or being reconsidered as the second anniversary approaches, request the Form 907 in writing and follow up; if the IRS will not sign it, the only way to keep the claim alive is to file suit.
How to respond
- Calendar two years from the letter date, less a margin for filing. Confirm the mailing date from the certified mail record if the letter is undated or the date is in doubt.
- Read the reason. A statute disallowance (claim filed late under IRC 6511) is answered with proof of a timely postmark, a timely informal claim, or an exception such as financial disability; see the lookback rules. A substantive disallowance is answered with the law and documents the reviewer did not have.
- To appeal, send a written protest to the office that issued the letter by the date it gives. For $25,000 or less a small case request letter is enough; above that, a formal protest. IRM 21.5.3.4.6.2 requires the IRS to forward the original claim, the return, the disallowance letter and the appeal statement, and Appeals cases now move electronically. See refund suits and claims for how Appeals handles a disallowed claim.
- If new information is available but no appeal is wanted, resubmit with the new documents. IRM 21.5.3.4.6.2 treats the response as a new case and allows the claim if the documents support it; if they do not, the IRS does not send another 105-C but a no-consideration letter, and the original two-year period keeps running.
- Request Form 907 if Appeals or reconsideration will run near the two-year date, and keep a copy signed by both sides.
- If the deadline is close and the matter is unresolved, file the refund suit in the U.S. District Court or the Court of Federal Claims. IRC 7422(a) requires that a claim have been filed first, which the disallowed claim satisfies.
What the IRS does next
IRM 21.5.3.4.6.2: “A response to Letter 105C, Claim Disallowed, and Letter 106C, Claim Partially Disallowed, is treated as a new case.” Resubmitting the same claim with nothing new gets a review of whether the disallowance was correct and, if it was, a no-consideration closing. New information that supports the claim is allowed through normal adjustment procedures. New information that does not support it draws the instruction “Do not send another disallowance letter” and a Letter 916C explaining what is still needed. A statement requesting an appeal, where no prior Appeals consideration was given, is packaged and sent to Appeals; the IRM says to inform the taxpayer and that Appeals typically makes contact within 120 days.
Once the two years pass, the IRS's position is fixed. IRM 21.5.3.4.6 says that when a claim is resubmitted after the time to sue has expired, “do not consider the claim,” and the no-consideration letter carries the text: “When the period of time to file suit has expired, we can no longer consider your claim.” IRC 6514(a)(2) prohibits a refund after that point even if the IRS later agrees the taxpayer was right. The IRM cautions that this applies even when the claim itself was timely but reached Appeals late.
Related notices
- Letter 106-C: partial disallowance where a refund still issues.
- CP22A: the adjustment notice when a claim is allowed.
- CP11: math error changes, which are not claim disallowances.
- Letter 3219: a notice of deficiency, the Tax Court route, as opposed to the refund route.
Questions practitioners ask
Does asking for Appeals stop the two-year clock?
No. IRC 6532(a)(4) says reconsideration or other action after the notice does not extend the period, and the IRM repeats it. Only a Form 907 signed by both sides extends it; only a timely suit preserves the claim otherwise.
The letter says we have 30 days (or another period) to appeal. Is that the real deadline?
It is the deadline for the administrative appeal the IRS offers. Missing it does not forfeit the claim; the two-year suit period is the one that does. The IRM treats any later response as a new case, so a request for Appeals that arrives after the letter's date can still be forwarded while the two years remain.
Can the IRS fix the letter if the reason stated is wrong?
The IRM requires the specific reason and claim amount, and a statute disallowance must state the received date and the date the claim should have been filed. A defective letter is worth raising in the appeal; it does not, by itself, stop the clock from running from the mailing date.
What is Form 2297 for?
It waives the certified-mail disallowance notice and starts the two-year period on the date the IRS receives it. It is used when the taxpayer would rather start the period at once than wait for a certified letter. Signing it is a choice about timing, not about the merits.
Can we just file a new claim instead of appealing?
A new claim for the same year and issue is treated as a response to the 105-C. It is allowed if new information supports it; otherwise it is closed as a no consideration and the original two years keep running. After two years the IRS will not consider it at all.