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Letter 105 C, Claim Disallowed

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The “Claim Disallowance” IRS Letter 105C or Letter 106C is your legal notice that the IRS is not allowing the credit or refund you claimed.

This notice or letter may include additional topics that have not yet been covered here. Please check back frequently for updates.

What does this letter mean to me?

The letter states the reason for the IRS’s decision, the date of the decision, and the tax year or period for which the claim is denied. In addition, the letter provides a timeframe in which you must file suit if you wish to challenge the denial in court.

How did I get here?

The credits or deductions that were claimed on your return were disallowed. Your account will be adjusted, possibly resulting in a reduced refund or balance due, or no refund at all.

You either filed your claim late, or the claim was timely but the amount of a refund or credit is limited. In general, to be timely, a claim for credit or refund must be filed within the later of three years from when you filed your return, or two years from the date you paid the tax. For more information about when to file a claim for credit or refund and limits on the amount of credit or refund, see Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund.

You have either not responded or have not provided a signed agreement consenting to the changes the IRS proposed. Without your consent, the IRS cannot assess any proposed deficiency without first providing you an opportunity to challenge these adjustments by filing a petition with the United States Tax Court.

What are my next steps?

If you agree with the IRS for the reasons stated in the letter, you don’t need to do anything further. If you do not agree, and still believe you are entitled to the credit or refund, you should send an explanation of why you believe you are entitled to the credit or refund (for example, you had an extension of time to file your original tax return) along with documentation proving your position. The IRS will consider your explanation before forwarding your request to the IRS Independent Office of Appeals (Appeals) which will decide if the claim should be allowed. If you don’t agree with the IRS’s decision, you can file suit with the United States District Court that has jurisdiction or with the United States Court of Federal Claims.

Note: These courts are part of the judicial branch of the federal government and have no connection with the IRS.

The timeframe is generally two years from the date of this letter. This time period continues to run if you decide to ask Appeals to reconsider the decision. Failure to timely file suit means that even if Appeals ultimately concludes that your claim was correct, you will not receive a refund or credit if Appeals reaches its decision after the period for filing suit has expired. Thus, while you can continue to try to resolve the claim with the IRS, as you approach the end of the two-year period specified in the letter, you may want to file a timely suit to protect yourself.

If you’re entitled to a refund, the IRS will send it about six to eight weeks from the time the IRS receives your response and adjusts your account. If the adjustment to your account results in a balance due, the IRS will send you a balance due notice and you should pay the amount you owe by the due date on the notice. If you can’t pay the full amount due, pay as much as you can to limit penalties and interest and visit Paying Your Taxes to consider online payment options. If you need additional assistance, call the IRS at the toll-free number on the top right corner of your notice.

Where can I get additional help?

Understanding your notice or letter

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If you still need help

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn’t working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.

Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.

Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List.

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