CP320B: The IRS Is Offering More Time on Your ERC Suit Deadline

By Forrest Baumhover, CFP®, EA · Last verified September 1, 2026

CP320B goes to a business already fighting an ERC disallowance under Letter 105-C or 106-C, with six months or less left on the two-year clock to sue for it. It flags a real option — Form 907, filed through the Document Upload Tool — but that option only works if the IRS signs it before the clock runs out, and the notice itself does not extend anything by just existing.

If you got this letter

Got a CP320B in the Mail?

CP320B means the IRS is still looking at your dispute of an Employee Retention Credit denial, and its own two-year deadline to sue for that credit is getting close — six months or less away. The notice is telling you about an option, not taking anything away by itself.

That option is Form 907, Agreement to Extend the Time to Bring Suit. If you and the IRS both sign it before your two-year deadline runs out, the clock gets pushed back and the IRS gets more time to finish looking at your case administratively — which usually beats ending up in court before anyone has actually finished reviewing your claim.

The two-year deadline itself started running on the date printed on your original Letter 105-C or 106-C — the letter that first denied all or part of your ERC claim. It is not six months from CP320B, and it is not extended just because you received CP320B. If nobody signs Form 907 and nobody files suit, the deadline arrives and the right to recover that money in court ends.

Download Form 907, fill it out, and file it through the IRS Document Upload Tool at IRS.gov/DUTReply, selecting "CP320B" from the notice drop-down. Do this well before the deadline — the IRS's own page for this notice puts it plainly: "The extension is not valid until the IRS signs it," and a form submitted the day before the clock runs out may not get countersigned in time to matter.

What the notice actually says

CP320B identifies you as a taxpayer the IRS has flagged for a specific reason: you are disputing an ERC disallowance under Letter 105-C or 106-C, and six months or less remain before the two-year deadline to file suit over that disallowance expires. The notice exists to surface one option before that window closes — filing Form 907 to extend the deadline by written agreement.

The IRS describes what a properly executed Form 907 accomplishes plainly: it "gives the IRS more time to consider the disallowance administratively and gives the taxpayer more time to file suit, if needed." That is the whole function of the form — it buys both sides time, rather than forcing a decision about litigation before the administrative review is finished.

What actually triggered it

CP320B is a byproduct of the volume of ERC claims still working through disallowance and appeal. The IRS created this notice and the Form 907/DUT pathway specifically because a meaningful number of taxpayers disputing a 105-C or 106-C denial were approaching their two-year suit deadline with the administrative review still unresolved — and without CP320B, many would not know an extension option existed at all until it was too late to use it.

The trigger condition is narrow and specific: you must already be waiting on the IRS's response to a dispute you filed over Letter 105-C or 106-C, and you must have six months or less left before that letter's two-year anniversary. Receiving CP320B by itself confirms both of those facts — the IRS does not send it to a business with a year left on the clock, or to one that never disputed the disallowance in the first place.

What CP320B does not cover

CP320B does not extend your deadline. It only tells you the extension option exists and where to file for it. The two-year clock keeps running from the date of your original Letter 105-C or Letter 106-C the entire time — filing Form 907 does not pause it retroactively, and neither does simply receiving this notice.

It also does not guarantee the IRS will sign — and until it does, nothing has moved. The IRS's own page for this notice states the point without qualification: "The extension is not valid until the IRS signs it." The announcement is explicit that "properly 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" — consideration, not automatic approval. And it does not resolve the underlying dispute over whether the ERC was properly disallowed in the first place; that determination is still pending, whether or not the deadline gets extended.

Nothing about CP320B changes what happens if you do nothing: the Letter 105-C and Letter 106-C pages both state the consequence plainly — file suit or sign an extension before the two-year period ends, or lose the ability to recover the credit in court, "even if Appeals has already made a favorable decision."

What CP320B gets confused with

CP320B is easy to mistake for a bill or a new examination notice because of the generic CP prefix — it is neither. It carries no balance due and proposes no new adjustment; its only content is the extension option and the six-month warning.

It is also not the same thing as an appeal. Disputing the disallowance with the IRS Independent Office of Appeals and extending the IRC §6532 suit deadline with Form 907 are two separate tracks that can run at the same time — signing Form 907 does not forfeit an appeal already in progress, and having an appeal pending does not extend the suit deadline on its own. Only a signed Form 907, or an actual suit filed in court, stops that specific clock.

Where this rule comes from

IRS news release IR-2026-58 (April 27, 2026) announced CP320B and the Form 907/Document Upload Tool pathway, and the IRS's own Understanding your CP320B notice page documents the same process directly. The underlying two-year deadline is the suit-filing period under IRC §6532, stated directly on the IRS's own Letter 105-C and Letter 106-C pages, both last reviewed by the IRS in 2026.

If your own two-year deadline is closer than six months and you have not yet received CP320B, do not wait for it — Form 907 is available to any eligible taxpayer through the same Document Upload Tool, and the IRS's own six-month eligibility window for CP320B does not mean six months is when you should start paying attention to the date on your letter.

Common Questions

Does CP320B extend my deadline automatically?

No. CP320B only flags that the option exists. Your deadline only moves if you file Form 907 and the IRS signs it before your original two-year period expires.

What happens if I ignore CP320B?

Nothing changes about your deadline — it keeps running from the date of your original Letter 105-C or 106-C. If that date passes with no suit filed and no signed extension, you lose the right to recover the disallowed credit in court.

How do I file Form 907?

Download it from IRS.gov, fill it out, then submit it through the IRS Document Upload Tool at IRS.gov/DUTReply, selecting "CP320B" from the notice drop-down. File well before your deadline — the IRS has to countersign it, and that takes time.

Does signing Form 907 mean I give up my appeal?

No. Extending the suit deadline and pursuing an appeal with the IRS Independent Office of Appeals are separate, and doing one does not cancel the other.