ERC Claims 2026: Pending, Denied, or Under Review? What Comes Next

Where ERC Claims 2026 Stand Now

A pending ERC claim is not the same as an approved claim.

Some employers are still waiting for the IRS to finish reviewing claims. Others are dealing with audits, full or partial disallowances, responses that have not yet been reviewed, or cases already in the IRS Independent Office of Appeals.

The IRS provides current information on the Employee Retention Credit and unresolved claims.

The year and quarter matter too.

For Q3 and Q4 2021 ERC claims, current law generally prevents the IRS from allowing the credit or refund unless the claim was filed on or before January 31, 2024.

That January 31 rule is focused on those last two quarters of 2021. Do not automatically apply it to 2020 or the first two quarters of 2021.

Mistake 1: Assuming a Pending Claim Means You Just Have to Wait

A pending claim can feel like a waiting game.

Do not treat it that way.

Confirm the quarter, filing date, Form 941-X, ERC calculation, payroll records, and the documents supporting eligibility. Then ask whether you would still be comfortable defending the claim today.

A claim sitting in IRS inventory is not an approval. If the IRS asks for more information, read the request carefully before responding. IRSProb's guide to an IRS audit letter can help organize the response.

If the claim has been pending for a long time, IRSProb also explains what to review with a pending Employee Retention Credit claim.

Mistake 2: Missing the January 31, 2024 Rule for Certain 2021 Claims

Not every unresolved 2021 ERC claim is in the same position.

For Q3 and Q4 2021 claims, the filing date can create a problem before the IRS even gets to the eligibility argument.

Current law generally blocks the credit or refund for those quarters unless the claim was filed on or before January 31, 2024.

If the IRS says the claim was late but you believe it was timely, pull mailing records, certified mail receipts, tracking information, and other proof of timely filing.

Confirm the filing date before rebuilding the eligibility argument. The Form 941-X instructions explain current ERC filing and reporting rules.

Mistake 3: Treating Letter 105-C or 106-C Like a Routine Status Letter

Letter 105-C and Letter 106-C deserve immediate attention.

Letter 105-C ERC disallowance is a claim-disallowance notice. Letter 106-C partial ERC disallowance generally means the IRS partially disallowed the ERC claim.

If a Letter 106-C disallows the ERC in full but allows other adjustments, the IRS directs taxpayers to the Letter 105-C guidance for the ERC disallowance.

Read the reason, tax period, amount allowed or denied, appeal rights, and date on the letter.

That date generally starts a separate two-year period for filing a refund suit, so do not treat the notice like routine correspondence.

Mistake 4: Assuming an Appeals Request Stops the Two-Year Deadline

This is one of the most important ERC deadlines to understand.

The IRS generally gives taxpayers two years from the date of the original claim-disallowance notice to file a refund suit.

Requesting an administrative appeal does not extend that period.

That means an Appeals case and the two-year court deadline can run at the same time.

If you received Letter 105-C or 106-C, track the original disallowance date separately from any response request or Appeals correspondence. A favorable Appeals result may not protect the refund if the statutory period has expired without a valid extension or lawsuit.

IRSProb's overview of the IRS appeals process explains the broader framework.

Mistake 5: Waiting Too Long to Ask About Form 907

Form 907 can help in some ERC cases that are getting close to the end of the two-year refund-suit period.

It is an agreement to extend the time to bring suit. It is not an automatic extension.

The taxpayer and the IRS must agree in writing before the existing period expires.

Submitting Form 907 by itself is not enough. The extension is valid only after the IRS signs and returns the countersigned agreement.

In 2026, the IRS created a streamlined process for certain ERC taxpayers who are waiting for the IRS to consider a response to Letter 105-C or 106-C and have six months or less left in the two-year period.

If the deadline is getting close, review the current Form 907 ERC extension process early. Filing the form does not stop the clock by itself.

Mistake 6: Appealing Without Rechecking the Original ERC Eligibility

Before appealing, go back to the reason the business qualified.

Was the claim based on a gross-receipts decline, a qualifying government order, or recovery startup business status? Then recheck qualified wages, PPP coordination, related entities, and any aggregation rules.

The IRS ERC eligibility checklist is a useful way to revisit the claim.

A denial does not automatically mean the claim was wrong, but an appeal still needs a supportable position.

Mistake 7: Keeping an Unpaid Claim Open When the Business No Longer Trusts It

Some employers have gone back through older ERC filings and decided they are no longer comfortable defending them.

For certain unpaid and unprocessed claims, the IRS withdrawal process may still be available.

Generally, the adjusted employment tax return must have been filed only to claim ERC, the employer must want to withdraw the entire ERC claim for that period, and the claim must not have been paid. The process may also apply when a refund check was received but has not been cashed or deposited.

Withdrawal is not available in every situation.

If other changes were included on the adjusted return, only part of the ERC needs to be corrected, or the claim has already been processed or disallowed for that period, another correction or dispute procedure may be needed.

The IRS also says a business that received Letter 106-C is not eligible for withdrawal for the tax periods covered by that letter.

Review the current ERC withdrawal process before taking action.

Pending, Denied, or Appealed: What Stage Are You In?

If the claim is still pending, focus on the quarter, filing date, eligibility file, and current correspondence.

If it is under examination, focus on the documents supporting eligibility and qualified wages.

If it was fully denied, identify the disallowance reason, notice date, Appeals options, and two-year refund-suit deadline.

If it was partially denied, determine exactly what the IRS allowed and what it rejected.

If the case is already in Appeals, keep tracking the two-year period separately.

If the business no longer believes an unpaid and unprocessed claim is supportable, determine whether withdrawal is still available.

What Employers Should Pull Before Taking the Next Step

Pull enough information to understand the claim without rebuilding it from memory:

• Original Form 941-X
• Proof of filing date
• ERC calculations
• Payroll records
• Gross-receipts calculations
• Government-order documentation, if applicable
• PPP coordination records
• Related-entity information
• Letters 105-C or 106-C
• Appeals correspondence
• IRS transcripts and refund information
• Income tax returns affected by the ERC wage adjustment

For Q3 and Q4 2021 ERC claims, keep qualified wage records and supporting documentation for at least seven years. The assessment period for those quarters was extended.

IRSProb's guide to small-business IRS audit records can also help you organize the broader file.

Do Not Forget the Income Tax Return

ERC is an employment tax credit, but it can change the income tax return too.

ERC reduces the wage expense allowed for the year in which the qualified wages were paid or incurred.

If the employer reduced wage expense expecting the credit and the ERC is later finally disallowed, current IRS guidance generally allows the employer to increase wage expense in the year the disallowance becomes final.

Depending on the facts and deadlines, an amended income tax return, Administrative Adjustment Request, or protective refund claim for the original year may also be available.

A final denial does not automatically mean reopening the old income tax return. Review what was reported before choosing the correction method.

What to Do Next With an Unresolved ERC Claim

Do not start by guessing whether the IRS will eventually pay the claim.

Start with the file.

Identify the quarter. Confirm the filing date. Read the latest IRS letter. Write down every deadline. Recheck the eligibility position and wage calculation.

Then decide what the case actually calls for.

That may mean keeping the file organized while the claim remains pending, responding to an examination, disputing a disallowance, tracking Appeals, asking whether Form 907 is appropriate, correcting an income tax issue, or withdrawing an eligible claim the business no longer believes it can support.

What matters most is knowing which stage you are in.

When Professional Help May Be Worth Considering

Consider professional review when Letter 105-C or 106-C has arrived, the two-year deadline is getting close, the case is already in Appeals, or several quarters are involved.

Help may also be useful when the original eligibility file is weak, related businesses complicate the claim, PPP wages were involved, or income tax returns may need correction.

The goal is not to defend every ERC dollar automatically.

The goal is to understand the claim, protect the deadlines that still matter, and choose the next step that fits the facts.

FAQs About ERC Claims 2026

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