Receiving IRS Letter 105C—officially known as the “Claim Disallowance” letter—can be unsettling for any taxpayer. This letter serves as a formal notice that the IRS has denied your request for a tax refund or credit, typically filed through an amended return or other claim. While the IRS outlines its reasons, the letter also opens a limited window of opportunity to challenge the decision.
This article explains what the letter means, why it may have been issued, and what options taxpayers have for appeal or litigation.
What does IRS Sends Letter 105C contain?
Letter 105C includes several critical elements:
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- The tax year or period involved;
- The reason the claim was disallowed; and
- The date of disallowance, which starts the clock on your appeal rights.
Common reasons for denial include late filing of the refund claim, beyond the statute of limitations; or limitations on the amount refundable, even when filed timely.
Generally, a claim must be submitted within the later of three years from the original filing date or two years from the date the tax was paid. (See IRS Publication 556 for detailed rules.)
Options After Receiving Letter 105C
Accept the Denial: If you agree with the IRS’s findings, no further action is required. The case is closed.
Request IRS Appeals Review: If you dispute the denial, you can respond in writing to the IRS office that issued the letter. Your response should:
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- Clearly explain why you disagree;
- Include supporting documentation; and
- Request that the claim be reviewed by the Independent Office of Appeals.
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It is essential to follow the guidelines outlined in IRS Publication 5 to properly frame your appeal request. The Appeals Office provides an independent review and may overturn the IRS’s initial decision if justified.
Litigate the Denial: If your claim is not resolved in Appeals or you prefer to take legal action directly, you have the right to file suit in either the United States District Court with jurisdiction or the United States Court of Federal Claims in Washington, D.C.
It is important to note that you must initiate the lawsuit within two years of the date on the Letter 105C. This deadline is firm—even if your claim is still under review by the IRS or Appeals.
Legal and Financial Implications
The two-year limitation period is critical. Even if you pursue an appeal, the two-year window continues to run. Failing to file a timely lawsuit means you forfeit your right to refund—even if Appeals later rules in your favor. Taxpayers nearing the end of this window should consider filing suit to preserve their rights.
If your claim is eventually allowed, the IRS will typically issue a refund within six to eight weeks. On the other hand, if the adjustment results in a tax liability, the IRS will send a balance due notice. Taxpayers unable to pay immediately should consider payment plans to minimize interest and penalties.
We Can Help!
Letter 105C is not merely a denial—it is a call to action. Whether you pursue administrative appeal or litigation, your response must be strategic, timely, and well-documented. At JH Tax Law, we can help you navigate the complex procedures and secure the outcome you deserve.
Contact our office for a confidential consultation today.