Letter 105-C: Your ERC Claim Was Fully Disallowed
By Forrest Baumhover, CFP®, EA · Last verified September 1, 2026
Letter 105-C tells a business the IRS is denying its entire Employee Retention Credit claim for a period — and starts a two-year clock, running from the date on the letter, to either appeal informally, sue in court, or lose the right to recover the credit at all.
If you got this letter
Got a Letter 105-C in the Mail?
Letter 105-C means the IRS looked at an Employee Retention Credit claim you filed and denied all of it for the period named on the letter. This is not a math correction and not a request for more paperwork — it is a full disallowance.
Two clocks start on the date printed on this letter, not the date you open it. The IRS asks that you dispute the denial within 30 days to help protect your options, but the deadline that actually ends your rights is two years: if you have not filed suit in court, or signed a written agreement extending the deadline, within two years of this letter's date, you lose the ability to recover that credit through the courts — even if an appeal was still pending when the deadline hit.
As of 2026, one common reason on this letter is new: the IRS denies the credit outright when you filed the claim after January 31, 2024, under a provision Congress added this year. If that is the reason given on your letter, disputing it on the facts of your specific claim will not work — the filing date itself is what disqualified it.
Do not let the 30-day window pass without at least starting a dispute, and mark the two-year date on a calendar the day this letter arrives. If that date is getting close and your dispute is still unresolved, see CP320B for the option to extend it in writing.
What the notice actually says
Letter 105-C states that the IRS is disallowing the Employee Retention Credit claimed for a specific period — either as a refund or as a reduction of tax reported on an employment tax return. It is a full disallowance: unlike its companion notice, Letter 106-C, which covers partial denials, 105-C means the IRS is allowing none of the ERC claimed for that period.
The letter states two deadlines. First, an informal one: "We generally ask that you dispute the disallowance within 30 days to help protect your two-year timeline to request an appeal or file suit." Second, the real jurisdictional one: "Generally, you have two years from the date of Letter 105-C (your original claim disallowance) to file suit."
What actually triggered it
A full ERC disallowance can rest on several grounds — the business did not meet the eligibility criteria for the credit, the claim duplicated wages used for other credits, or documentation did not support the amount claimed. As of 2026, IRS.gov names an additional, purely procedural ground: the claim was filed too late. The page states it directly — "We can't allow your claim for Employee Retention Credit (ERC) because it was filed after Jan. 31, 2024," citing Public Law 119-21, §70605(d): "no credit or refund with respect to such credit will be allowed after July 4, 2025, for the last two quarters of 2021 unless the claim was filed on or before Jan. 31, 2024."
That filing-date ground is categorically different from a factual eligibility dispute. If your letter cites it, no amount of additional payroll documentation changes the outcome — the claim's own filing date is what disqualified it, and any dispute has to address that date, not the underlying wages.
What Letter 105-C does not cover
Letter 105-C does not itself assess a penalty or start a collection action — it is a denial of a credit claim, not a bill. If you had already received the disallowed ERC as a refund, a separate process recovers that money; the letter's own deadlines govern the right to contest the disallowance, not any resulting balance due.
It also does not extend itself. The two-year suit period keeps running whether or not you file an informal dispute within 30 days, and whether or not an appeal is still open when the two years is up. The IRS states this without qualification: "By law, we can't issue a refund or allow a credit after the two-year period unless you file suit during that period." The only way to move that date is a signed Form 907 agreement, executed by both sides before the two years run out.
What Letter 105-C gets confused with
The 30-day figure on this letter is easy to mistake for a hard deadline the way a CDP or Tax Court notice's response window works. It is not — missing 30 days does not by itself forfeit the right to appeal or sue. What it forfeits is time: an informal dispute filed late still has to fit inside the same two-year window, and starting late leaves less runway to actually resolve anything before that window closes.
Letter 105-C is also easy to conflate with Letter 106-C, its partial-disallowance counterpart, or with CP320B, a separate notice that only exists for taxpayers already disputing a 105-C or 106-C denial with six months or less left on the clock. Receiving Letter 105-C does not mean CP320B is coming — it only arrives if the two-year deadline gets close while a dispute is still open.
Where this rule comes from
The two-year suit period is the deadline set by IRC §6532 for refund suits generally, applied here to a disallowed ERC claim exactly as the IRS's own Letter 105-C page states it. The new filing-date disallowance ground traces to §70605(d) of the Working Families Tax Cut Act (Public Law 119-21), which set January 31, 2024 as the cutoff for filing an ERC claim for the last two quarters of 2021 and barred allowance of any such claim filed after that date, effective July 4, 2025.
A taxpayer disputing this letter and approaching the two-year deadline without a resolution should not wait for the IRS to reach out — Form 907 is available proactively through the Document Upload Tool described on CP320B's page, and nothing requires receiving CP320B first to use it.
Common Questions
What is the real deadline on Letter 105-C — 30 days or two years?
Both matter, but two years is the one that actually forfeits your rights. The IRS asks for a dispute within 30 days to help protect the two-year window, but the hard deadline to file suit — or sign an agreement extending it — is two years from the date on the letter.
Does the two-year clock pause while my appeal is pending?
No. The IRS states plainly that the two-year period runs out on its own even if Appeals has already made a favorable decision on the dispute. Only filing suit or signing a Form 907 extension before the deadline stops it.
My claim was denied because I filed after January 31, 2024 — can I dispute that?
You can dispute it, but the filing-date ground under WFTC §70605(d) is a factual, not discretionary, determination — if the claim genuinely was filed after that date for the affected quarters, no additional documentation changes the outcome.
What if my two-year deadline is coming up and my dispute is not resolved?
See CP320B — the IRS notice and Form 907 process that lets both sides agree in writing to extend the suit deadline, as long as both sides sign it before the original two years runs out.