IRS Form 907 – In the complex world of tax refunds and disputes, timing is everything. If you’ve filed a claim for a tax refund or credit and received a notice of disallowance from the IRS, you have a limited window to take action. That’s where IRS Form 907 comes into play. This form, officially titled the “Agreement to Extend the Time to Bring Suit,” allows taxpayers and the IRS to mutually agree to extend the statute of limitations for filing a lawsuit to recover overpaid taxes. In this comprehensive guide, we’ll break down everything you need to know about Form 907, including its purpose, how to use it, and key considerations to protect your rights.
Whether you’re a taxpayer dealing with a denied refund claim or a tax professional advising clients, understanding Form 907 can prevent costly mistakes and ensure you don’t lose your right to a potential refund. Let’s dive in.
What Is IRS Form 907?
IRS Form 907 is a legal agreement between a taxpayer (or taxpayers) and the Commissioner of Internal Revenue. It extends the deadline for the taxpayer to file a lawsuit in a U.S. District Court or the U.S. Court of Federal Claims to recover taxes that were overpaid or erroneously assessed. This form is particularly relevant when a claim for refund or credit has been disallowed, either fully or partially, by the IRS.
Under Internal Revenue Code (IRC) Section 6532(a)(1), taxpayers generally have two years from the date the IRS mails a notice of claim disallowance to file a refund suit. However, IRC Section 6532(a)(2) allows this period to be extended by mutual agreement before the original deadline expires. Form 907 serves as the written documentation for this extension. It’s a simple, two-page form last revised in January 2001, but it remains in use today as confirmed by current IRS publications.
Key elements of the form include:
- Taxpayer information (name, address, Taxpayer Identification Number).
- Details of the disallowed claims (period ended, kind of tax, amount, date of disallowance notice or waiver).
- Signatures from the taxpayer(s), representatives (if applicable), and an authorized IRS official.
- A required statement of issues involved in the claims.
The form emphasizes that it only becomes effective once signed by the appropriate IRS official on behalf of the Commissioner.
The Purpose of Form 907: Extending Your Time to Sue for a Tax Refund
The primary purpose of IRS Form 907 is to give taxpayers more time to resolve disputes administratively without rushing to court. When the IRS disallows a refund claim—via a formal notice or a waiver (Form 2297)—the clock starts ticking. You have two years to file suit, but during this time, you might request reconsideration or appeal through the IRS Independent Office of Appeals (Appeals).
Importantly, IRC Section 6532(a)(4) states that any administrative reconsideration does not automatically extend the two-year period. This can create pitfalls: If Appeals takes longer than two years to decide, you could lose your right to sue or receive a refund, even if you’re entitled to one. Form 907 bridges this gap by allowing an extension, potentially preventing inequities where the IRS’s delays harm the taxpayer.
For example, in cases involving Employee Retention Credit (ERC) claims, taxpayers facing disallowances have used Form 907 to preserve their rights amid processing backlogs. Multiple extensions are possible, as long as each is signed before the prior one expires.
When Should You Use IRS Form 907?
Use Form 907 if:
- Your refund claim has been disallowed, and you’re pursuing an appeal or reconsideration.
- The two-year statute is approaching expiration, but you need more time for administrative resolution.
- You’re concerned about IRS delays preventing a timely refund payment (IRC Section 6514(a)(2) prohibits refunds after the suit-filing period expires unless extended).
Common scenarios include:
- Disputed tax refunds from overpayments, credits, or abatements.
- Cases where Appeals is reviewing a notice of claim disallowance but hasn’t decided within two years.
- Situations involving joint returns, estates, trusts, or corporations.
Do not use it if the two-year period has already expired—extensions must be agreed upon beforehand. Also, note that while you can request reconsideration, it’s wise to file Form 907 proactively to protect your rights.
How to Fill Out IRS Form 907: Step-by-Step Guide?
Filling out Form 907 is straightforward, but accuracy is crucial. Here’s a step-by-step breakdown based on the form’s built-in instructions:
- Taxpayer Information: Enter your name(s), address, and Taxpayer Identification Number (e.g., SSN or EIN).
- Agreement Details: Specify the expiration date for the extension, the tax period(s) involved, type of tax, amount claimed, and the date of the disallowance notice or waiver.
- Attach a Statement: Include a detailed statement of the issues in your refund claims. This is mandatory.
- Signatures:
- Individual taxpayers: Sign and date. For joint returns, both spouses must sign unless one has power of attorney.
- Representatives: Sign with title (e.g., attorney) and attach Form 2848 if not already filed.
- Fiduciaries: Use Form 56 and sign appropriately.
- Corporations: Include corporate name, officer signature(s), and division executive details (e.g., “Director, Small Business/Self-Employed Division”).
- IRS Signature: Leave this blank—the IRS will sign if they agree.
Prepare the original and a copy. The form includes specific instructions for IRS employees on division titles.
Where to Submit IRS Form 907?
The form itself doesn’t specify a submission address, which can be a challenge. If your case is assigned to an IRS agent or Appeals Officer, submit it directly to them. Otherwise:
- Contact the IRS via the phone number on your disallowance notice.
- Consider involving the Taxpayer Advocate Service (TAS) if you’re facing hardships or delays—they can assist in processing.
- Mail it to the IRS service center where you filed your original return, but verify with IRS.gov or call 800-829-1040.
Always keep a copy and track the two-year deadline diligently—the IRS won’t remind you.
Important Considerations and Potential Pitfalls
- Effectiveness: The agreement isn’t valid until the IRS signs it. Continue monitoring your case and be prepared to file suit if needed.
- Reopening Claims: You can request the IRS to reopen and reconsider your claim before the extended expiration by submitting a written request with details and a copy of Form 907.
- Litigation Impact: Ongoing lawsuits don’t bind the IRS’s decision on issues covered by this form.
- TAS Recommendations: The National Taxpayer Advocate has highlighted issues with the current system, proposing amendments to IRC Section 6532 to automatically extend the period during Appeals reviews. Until changes occur, Form 907 is your safeguard.
- Government Shutdowns and Delays: Events like shutdowns can exacerbate delays, making extensions critical for claims like ERC.
FAQs About IRS Form 907
How long can I extend the time with Form 907?
You can specify any reasonable date, and multiple extensions are allowed if signed timely.
What if the IRS refuses to sign?
You must file suit within the original two-year period. Seek TAS help if you believe it’s unwarranted.
Is there a fee to file Form 907?
No, it’s free.
Can I use Form 907 for any tax type?
Yes, it applies to various taxes, as long as a claim was disallowed.
Where can I download Form 907?
Directly from the IRS website: https://www.irs.gov/pub/irs-pdf/f907.pdf.
Navigating tax disputes requires vigilance, but IRS Form 907 provides a vital tool to extend your options. Always consult a tax professional for personalized advice, and stay informed through official IRS resources to protect your financial interests.