IRS Form 907 Guide: Agreement to Extend Time to Bring Suit

1. Introduction – What is Form 907?

IRS Form 907, officially titled Agreement to Extend the Time to Bring Suit, is an official legal contract governed by the Internal Revenue Service (IRS). Executed under Section 6532(a)(2) of the Internal Revenue Code, it is a formal agreement between a taxpayer and the federal government.

Under federal tax law, when the IRS disallows or rejects a taxpayer’s formal claim for a tax refund, the taxpayer is subject to a strict statutory deadline—exactly two years from the date of the disallowance notice—to file a civil refund lawsuit against the United States in federal court.

Form 907 mutually extends this 2-year litigation deadline to a specified future date. It allows the taxpayer and the IRS additional time to negotiate, review new evidence, or conduct administrative appeals without forcing the taxpayer to file an expensive federal lawsuit just to preserve their legal rights.

2. Purpose of the Form

The primary purpose of Form 907 is to grant a written, legally binding extension of the statutory timeframe during which a taxpayer can file a refund lawsuit in a U.S. District Court or the U.S. Court of Federal Claims.

Form 907 solves a major procedural dilemma for taxpayers and the IRS. Preparing a tax refund lawsuit in federal court requires substantial legal fees, court costs, and formal litigation. If administrative settlement discussions or audit reconsiderations are progressing well but the 2-year deadline is nearing, Form 907 “freezes the clock,” providing time to resolve the dispute out of court.

Additionally, Form 907 enforces statutory written requirements. Under Internal Revenue Code Section 6532, verbal agreements or informal promises from IRS revenue agents cannot legally extend the suit deadline. Form 907 provides the mandatory written agreement needed to protect the taxpayer’s right to sue.

3. Who Needs to File This Form

Form 907 is executed by individual taxpayers, corporations, small business owners, or estate fiduciaries who are involved in an ongoing tax refund dispute with the IRS.

You may need to execute Form 907 if your tax situation satisfies all of the following criteria:

• Refund Claim Disallowed: You filed a formal refund claim (such as an amended return on Form 1040-X, Form 1120-X, or Form 843) that was rejected in whole or in part by the IRS.
• Notice of Disallowance Issued: The IRS sent you an official Notice of Claim Disallowance (such as Letter 105C or Letter 106C), or you executed Form 2297 (Waiver of Registered Mail Notification).
• Approaching 2-Year Deadline: The statutory 2-year anniversary of the disallowance notice is approaching.
• Ongoing Administrative Review: You and the IRS (or the IRS Independent Office of Appeals) are actively reviewing new documentation or negotiating a settlement out of court.

4. Who Is Exempt / Not Required to File

Form 907 is a specialized legal contract used only during formal refund litigation disputes. Most taxpayers will never need to use this form.

You should NOT execute Form 907 in the following situations:

• No Formal Refund Disallowance: Taxpayers whose refund claims are still pending initial review or whose claims were fully approved and paid.
• Tax Court Deficiency Disputes: Taxpayers disputing a 90-day Notice of Deficiency in U.S. Tax Court. Tax Court deficiency procedures operate under different statutory rules (Section 6213) and do not use Form 907.
• Expired Lawsuit Windows: Taxpayers whose 2-year suit period has already expired. Form 907 **cannot retroactively resurrect an expired deadline**.

5. When to File

Form 907 does not follow an annual tax return filing deadline. It is an event-based legal agreement executed during active dispute resolution.

Review the mandatory execution timeline rules:

• Must Be Signed Before 2-Year Clock Expires: Form 907 MUST be prepared, signed by the taxpayer, and officially signed/approved by an authorized IRS official **before the original 2-year suit period expires**.
• The 2-Year Clock Start Date: The 2-year litigation window begins on the exact date the IRS mails the official Notice of Claim Disallowance by certified or registered mail (or the date Form 2297 is executed).
• Fixed Extended Expiration Date: The agreement specifies a clear, agreed-upon future calendar date (such as extending the suit window by 12 or 24 months).

6. Where and How to File

Form 907 is a paper-based legal contract that must be submitted directly to the IRS official managing your refund claim file.

Complete two original copies of Form 907, sign both copies, and submit them directly to the assigned IRS Appeals Officer, Revenue Agent, or IRS Area Director handling your case via certified mail or secure fax.

An authorized IRS Area Director or Appeals Manager must sign the agreement before it becomes legally effective. Once approved, the IRS returns one fully executed original copy to the taxpayer for their permanent legal files.

7. Step-by-Step Instructions to Fill the Form

Form 907 is a structured legal contract containing taxpayer identifiers, tax period disclosures, and formal extension clauses. Review the summary breakdown table below.

Form 907 Section	Section Title	Required Information & Terms
Header	Taxpayer Identification	Full legal name, SSN or EIN, spouse details (if joint), and current physical mailing address.
Tax Form Details	Covered Return Types	Specify the exact tax form numbers (e.g., Form 1040, 1120, 941, 706) involved in the refund claim.
Tax Periods & Amounts	Covered Years & Claim Dollar Value	Explicit list of calendar tax years or quarters and the exact dollar amount of the disallowed refund claim.
Disallowance Date	Notice Date / Form 2297 Date	The exact date the IRS mailed Letter 105C/106C or the date Form 2297 was executed.
Extended Expiration Date	New Lawsuit Deadline	Agreed future calendar date through which the taxpayer’s right to bring a refund suit is extended.
Signature Block	Legal Execution	Signatures of taxpayer (and spouse if joint return) or authorized corporate officer, alongside official IRS approval signature.

Verifying Tax Periods and Disallowance Dates

When completing Form 907, cross-reference the exact date printed on your certified **Letter 105C or Letter 106C (Notice of Claim Disallowance)**. State the specific tax periods (e.g., tax year 2022) and the exact dollar amount of the refund claimed. Ensure the new proposed expiration date provides ample time to conclude administrative appeals.

Joint Return Signature Requirement

If the original refund claim involved a joint individual income tax return (Form 1040), **both spouses must sign and date Form 907**. If an attorney or CPA executes the form, a valid Form 2848 (Power of Attorney) authorizing suit extension agreements must be attached.

8. Required Documents/Information Needed Before Filling

To execute Form 907 successfully, compile all official IRS correspondence regarding your disallowed refund claim.

Ensure you have the following verification materials ready:

• IRS Notice of Disallowance: Copy of Letter 105C or Letter 106C showing the certified mailing date.
• Original Claim for Refund: Copy of the original amended return (Form 1040-X, 1120-X, 843) requesting the tax refund.
• Form 2297 (if applicable): Copy of signed Form 2297 (Waiver of Registered Mail Notification) if executed during prior audit steps.
• Form 2848 (Power of Attorney): Executed Form 2848 if a tax attorney, CPA, or Enrolled Agent is representing you.

9. Common Mistakes to Avoid

Failing to execute Form 907 correctly can cause the permanent loss of your right to sue for a tax refund. Avoid these critical mistakes:

• Attempting to File Form 907 After Expiration: Submitting Form 907 after the 2-year suit period has already passed. The IRS has **zero legal authority to sign Form 907 if the 2-year deadline has expired**.
• Relying on Verbal Assurances: Believing an IRS agent who says over the phone that “the deadline is paused.” Under Section 6532(a)(2), **only a fully signed, written Form 907 legally extends the suit window**.
• Failing to Secure the IRS Official’s Signature: Signing Form 907 and mailing it to the IRS right before the deadline, but failing to ensure the IRS Area Director actually signs it before the 2-year clock expires.
• Confusing U.S. Tax Court with Federal Refund Courts: Assuming Form 907 applies to U.S. Tax Court. Tax Court handles pre-payment deficiency notices (90-day letters). Form 907 applies strictly to post-payment refund suits in U.S. District Court or the Court of Federal Claims.
• Missing Joint Spouse Signatures: Submitting Form 907 for a joint tax return signed by only one spouse.

10. Consequences of Missing the Deadline

Failing to execute Form 907 before the 2-year window expires or failing to file a federal lawsuit carries permanent legal consequences.

Key consequences include:

• Permanent Loss of Right to Sue: Under federal law, if the 2-year period expires without a court filing or an executed Form 907, your claim for refund is legally dead. No federal court has jurisdiction to hear the case.
• Forfeiture of Tax Refund: The IRS disallowance becomes final and unappealable, forcing the taxpayer to permanently forfeit the disputed tax, interest, or penalty refund.
• Forced Immediate Litigation: If the IRS refuses to execute Form 907, the taxpayer’s only remaining option to protect their money is to immediately hire legal counsel and file a formal civil lawsuit in U.S. District Court or the U.S. Court of Federal Claims before the 2-year clock runs out.

11. Related Forms or Schedules

Form 907 operates alongside several core federal refund, audit, and legal forms:

• Form 1040-X: Amended U.S. Individual Income Tax Return.
• Form 1120-X: Amended U.S. Corporation Income Tax Return.
• Form 843: Claim for Refund and Request for Abatement.
• Form 2297: Waiver of Registered Mail Notification of Claim Disallowance.
• Form 2848: Power of Attorney and Declaration of Representative.
• IRS Letter 105C / 106C: Formal Notice of Claim Disallowance.

12. Frequently Asked Questions

1. What is IRS Form 907?

IRS Form 907 is a formal written agreement between a taxpayer and the IRS that extends the statutory 2-year deadline for filing a tax refund lawsuit in federal court.

2. What is the 2-year rule for tax refund lawsuits?

Under Section 6532, after the IRS mails a formal Notice of Claim Disallowance by certified mail, the taxpayer has exactly 2 years from that mailing date to file a refund lawsuit in federal court.

3. Why would a taxpayer want to sign Form 907?

Executing Form 907 extends the court deadline, allowing the taxpayer to continue negotiating with IRS Appeals or submitting new evidence out of court without paying heavy federal litigation costs.

4. Can Form 907 be signed after the 2-year deadline has passed?

No. Under federal tax law, Form 907 must be signed by both the taxpayer and the IRS before the original 2-year deadline expires. An expired statute of limitations cannot be extended.

5. What is the difference between U.S. Tax Court and a federal refund lawsuit?

U.S. Tax Court hears disputes *before* you pay the tax (following a 90-day deficiency notice). Federal District Courts and the Court of Federal Claims hear lawsuits *after* you paid the tax and filed a disallowed refund claim.

6. Does a phone call or letter from the IRS pause the 2-year clock?

No. Under Section 6532(a)(3), administrative reconsiderations, phone calls, or informal letters do **not** pause or suspend the 2-year suit clock. Only a executed Form 907 extends the deadline.

13. Conclusion

IRS Form 907 is a vital legal safeguard for taxpayers disputing rejected refund claims. By formalizing an extension of the 2-year federal suit deadline, it gives taxpayers and the IRS the time needed to resolve complex tax disputes administratively while preserving the legal right to sue if negotiations fail.

To protect your tax refund, monitor the 2-year anniversary of your IRS disallowance letter closely, request Form 907 early if administrative appeals are ongoing, ensure both you and the IRS sign the agreement before the deadline, and retain fully executed originals in your legal files.