Thousands of businesses are awaiting their refund, but passively waiting exposes them to the "Two-Year Trap"—a strict legal deadline that can void their entire Employee Retention Credit (ERC) claim. Once the IRS mails a disallowance notice, a two-year statute of limitations begins immediately, and the administrative appeals process will not pause this clock.
Since we last warned taxpayers about this risk in September, the IRS environment has grown increasingly volatile. You must act now to protect your legal rights and prevent losing your refund forever.
Don't wait until it’s too late—call our team today at (410) 497-5947 or schedule a confidential consultation to secure your ERC claim.
As we discussed previously, the most urgent deadline is the two-year statute of limitations for filing a lawsuit to recover an ERC refund.
Taxpayers who miss this deadline forfeit their right to the refund entirely under IRC §6514. To protect against this, your primary option is to secure a countersigned Form 907, Agreement to Extend the Time to Bring Suit, before the two years expire.
The ability to resolve these claims was severely damaged by recent events. The government shutdown has ended, but its impact on the IRS backlog is profound. The shutdown halted appeals conferences and stopped the work of the Taxpayer Advocate Service (TAS).
This event exacerbated existing delays caused by the massive backlog of claims and a 28 percent decrease in personnel within the Appeals Office, the Office responsible for addressing taxpayers’ protests of disallowances. Frost Law Partner Rebecca Sheppard noted that the shutdown made the problem "that much more challenging," leading to stacks of backlogs.
As the IRS struggles to process a surge in new audits, practitioners are reporting "radio silence" after submitting documents. This lack of response increases the chance that the two-year window will close before the IRS even acknowledges the claim.
The administrative chaos is compounded by new legal restrictions. The IRS recently issued FAQs concerning the One Big Beautiful Bill Act (OBBBA).
The OBBBA aims to prevent the refunding of new ERC claims for the third and fourth quarters of 2021 if filed after January 31, 2024, and requested after July 4, 2025. This applies specifically to new claims, not amended returns to withdraw a claim. Currently, we are seeing numerous disallowances asserting that claims were filed after this new deadline despite evidence to the contrary. This is likely to create additional delays, confusions, and frustrations for taxpayers.
Frost Law Partner Peter Haukebo has stated that the guidance may be incomplete and that the OBBBA's retroactive changes are likely to be reviewed by the courts. Taxpayers must be aware of this specific deadline while navigating their claims.
Adding further concern is the growing litigation between ERC preparers. A lawsuit was recently filed alleging the improper use and sharing of IRS tax data for 22,000 taxpayers without consent.
The lawsuit involved Tax Guardian LLC, TaxStatus Inc., and Innovation Refunds LLC. Sharing this data without taxpayer permission may constitute a violation of IRC §6103.
Haukebo characterized this as the natural "fallout" from the ERC crisis. These disputes show that "agreements and relationships that were thrown together haphazardly" are now falling apart.
The urgency of the ticking two-year clock demands immediate action. Relying solely on the slow-moving administrative appeals system is a gamble you cannot afford. The stakes are too high to navigate this hidden deadline alone. Once the clock expires, it does not matter if you did qualify for the Credit. Your right to a refund no longer exists.
Contact Frost Law immediately to discuss your specific ERC disallowance and develop a strategic plan to secure your refund. Call our team at (410) 497-5947 or visit our consultation page today to get started.
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Thousands of businesses are awaiting their refund, but passively waiting exposes them to the "Two-Year Trap"—a strict legal deadline that can void their entire Employee Retention Credit (ERC) claim. Once the IRS mails a disallowance notice, a two-year statute of limitations begins immediately, and the administrative appeals process will not pause this clock.
Since we last warned taxpayers about this risk in September, the IRS environment has grown increasingly volatile. You must act now to protect your legal rights and prevent losing your refund forever.
Don't wait until it’s too late—call our team today at (410) 497-5947 or schedule a confidential consultation to secure your ERC claim.
As we discussed previously, the most urgent deadline is the two-year statute of limitations for filing a lawsuit to recover an ERC refund.
Taxpayers who miss this deadline forfeit their right to the refund entirely under IRC §6514. To protect against this, your primary option is to secure a countersigned Form 907, Agreement to Extend the Time to Bring Suit, before the two years expire.
The ability to resolve these claims was severely damaged by recent events. The government shutdown has ended, but its impact on the IRS backlog is profound. The shutdown halted appeals conferences and stopped the work of the Taxpayer Advocate Service (TAS).
This event exacerbated existing delays caused by the massive backlog of claims and a 28 percent decrease in personnel within the Appeals Office, the Office responsible for addressing taxpayers’ protests of disallowances. Frost Law Partner Rebecca Sheppard noted that the shutdown made the problem "that much more challenging," leading to stacks of backlogs.
As the IRS struggles to process a surge in new audits, practitioners are reporting "radio silence" after submitting documents. This lack of response increases the chance that the two-year window will close before the IRS even acknowledges the claim.
The administrative chaos is compounded by new legal restrictions. The IRS recently issued FAQs concerning the One Big Beautiful Bill Act (OBBBA).
The OBBBA aims to prevent the refunding of new ERC claims for the third and fourth quarters of 2021 if filed after January 31, 2024, and requested after July 4, 2025. This applies specifically to new claims, not amended returns to withdraw a claim. Currently, we are seeing numerous disallowances asserting that claims were filed after this new deadline despite evidence to the contrary. This is likely to create additional delays, confusions, and frustrations for taxpayers.
Frost Law Partner Peter Haukebo has stated that the guidance may be incomplete and that the OBBBA's retroactive changes are likely to be reviewed by the courts. Taxpayers must be aware of this specific deadline while navigating their claims.
Adding further concern is the growing litigation between ERC preparers. A lawsuit was recently filed alleging the improper use and sharing of IRS tax data for 22,000 taxpayers without consent.
The lawsuit involved Tax Guardian LLC, TaxStatus Inc., and Innovation Refunds LLC. Sharing this data without taxpayer permission may constitute a violation of IRC §6103.
Haukebo characterized this as the natural "fallout" from the ERC crisis. These disputes show that "agreements and relationships that were thrown together haphazardly" are now falling apart.
The urgency of the ticking two-year clock demands immediate action. Relying solely on the slow-moving administrative appeals system is a gamble you cannot afford. The stakes are too high to navigate this hidden deadline alone. Once the clock expires, it does not matter if you did qualify for the Credit. Your right to a refund no longer exists.
Contact Frost Law immediately to discuss your specific ERC disallowance and develop a strategic plan to secure your refund. Call our team at (410) 497-5947 or visit our consultation page today to get started.
