Step-by-step action plan

  1. Read the IRS notice carefully and note deadlines
  • The IRS notice will explain why the refund was reduced, delayed, or denied. Notices often set a response window (commonly 30–60 days) — read it and calendar the deadline immediately. If the denial involves an offset for past‑due federal or state debts, the notice will usually identify the program (Treasury Offset Program).
  1. Gather documentation that supports your claim
  • Collect copies of the original return, W‑2s and 1099s, receipts, contracts, school records for education credits, Form 8829 for business use of home, and any other evidence that supports the contested item. Keep organized copies of all IRS correspondence.
  1. File an administrative refund claim or amend the return
  • For most individual refunds, you’ll correct errors and file Form 1040‑X (Amended U.S. Individual Income Tax Return) or submit the IRS claim form the notice directs. Refund claims are subject to timing limits: generally within three years from the date you filed your original return or two years from the date you paid the tax, whichever is later (IRC §6511) — see the IRS Form 1040‑X guidance (IRS).
  • If your issue is a missing form or math error, the IRS may accept the missing documents without a full amended return.
  1. Respond promptly to IRS requests
  • Send clear, organized copies (don’t send originals unless requested). Include a cover letter that states the issue, the tax year, the notice number, and that you are requesting a refund or reconsideration.
  • Consider filing Form 2848 (Power of Attorney) if a tax professional will represent you.
  1. Track the claim and escalate if delayed
  • Use the IRS “Where’s My Amended Return?” and other tracking tools for status updates (IRS). If you’ve waited an unreasonable time or face hardship, contact the Taxpayer Advocate Service for help with unresolved problems (Taxpayer Advocate Service).
  1. If the claim is denied or the IRS doesn’t act, prepare for litigation
  • Before suing for a refund in federal court, you generally must first file an administrative claim with the IRS and receive a denial or allow six months to pass without a decision (26 U.S.C. §7422). After that you can file a refund suit in U.S. District Court or the U.S. Court of Federal Claims. Note: the U.S. Tax Court handles deficiency notices (a different process) rather than routine refund suits.

Deadlines and legal considerations

  • Statute of limitations for refund claims: generally 3 years from filing or 2 years from payment (IRC §6511). Missing these deadlines usually bars recovery.
  • Suit timing: you must exhaust administrative remedies before suing under 26 U.S.C. §7422. Keep proof of your claim filing and the IRS denial (or proof that six months elapsed).
  • Payment requirement: for many refund suits you first pay the disputed tax and then sue for a refund; there are specific exceptions and case‑dependent pathways — consult counsel.

Common reasons refunds are denied

  • Math or processing errors, missing forms or schedules, identity theft, incorrectly claimed credits (e.g., education or earned income credits), offsets for federal/state debts, or identity verification holds.

Documents to include when you submit an appeal or claim

  • A copy of the IRS notice, a concise cover letter, the amended return or claim form, supporting documents (W‑2s, 1099s, receipts, proof of payment), and a statement of the relief requested.

Practical tips from practice

  • In my practice, quick, well‑organized responses and a concise cover letter often resolve denials without litigation. Keep electronic copies and a document index so you can produce records fast.
  • If your refund was offset to pay federal or state debts, contact the agency handling the offset (Treasury’s Offset Program) as well as the IRS to understand options for waiver or correction (Fiscal Service).
  • Use the Taxpayer Advocate Service when IRS delays create financial hardship (Taxpayer Advocate Service).

When to hire a tax attorney

  • Consider an attorney if the refund amount is large, the IRS alleges fraud, or litigation is likely. Attorneys experienced in tax litigation can advise whether to sue in District Court or the Court of Federal Claims and can manage complex procedural deadlines.

Related FinHelp resources

Authority and where to read more

Disclaimer
This article is educational and not legal or tax advice. For case‑specific guidance, contact a qualified tax professional or tax attorney who can review your facts, applicable deadlines, and options.