Letter 5376: Full or partial claim disallowance, employment tax: 30-day letter

What Letter 5376 is

The examiner's preliminary disallowance of a claim for refund on an employment-tax return or a penalty attached to one. The manual names it "Full or Partial Claim Disallowance Letter - Employment Tax" and calls it a 30-day letter, sent with Form 886-A (the explanation, required if unagreed), Form 2297, Form 3363, Form 4666 and Pub 5 (IRM 4.23.13.3.1.2, July 1, 2024). "The explanation and reason for disallowance must include enough information to enable the taxpayer to challenge the determination" (IRM 4.23.13.3.1(2)). It is not a certified statutory notice, so it does not start the two-year suit period under IRC 6532.

The deadline

30 days to protest to Appeals (IRM 4.23.13.3.1.2; 4.23.13.2.2(11)).

What to do

Read Form 886-A for the stated reason. If you disagree, send a written protest within the 30 days; the examiner built 30 days for your response and 30 for rebuttal into the statute check (IRM 4.23.13.2.2(11)). If you agree, sign Form 3363, which "does not waive the taxpayer's right to file suit" (IRM 4.23.13.3.5). Sign Form 2297 only if you want the two-year suit clock to start now instead of waiting for a certified Letter 905/906 (IRM 4.23.13.3.4).

Claims for refund on employment and withholding tax

A payer that has paid tax or a penalty on a Form 945 (or 941, 943, 944) account and wants it back files a claim: a Form 945-X for an overpayment of the tax itself, or a Form 843 for a penalty or interest. The claim goes to a campus, and if it raises a question the campus cannot answer from the account it is sent to an employment tax examiner, who may ask for records, decide the claim on the merits, and issue a decision. Letter 5376 is the examiner's preliminary decision to disallow all or part of it. It comes with Form 886-A, which must state the reason in enough detail for you to challenge it, and with the forms that let you agree, protest, or start the clock on a lawsuit. It is a 30-day letter, not a statutory notice of disallowance, which matters because the two-year period for suing on a disallowed claim starts only from a certified disallowance (Letter 905 or 906) or from a Form 2297 you sign to waive that notice.

Agree, protest, or wait

Read Form 886-A for the reason. If it is a documentation gap, supply the documents with a short letter within the 30 days; examiners can and do reverse a preliminary disallowance on new records. If you disagree on the merits, send a written protest within the 30 days asking for Appeals consideration; the examiner has built time for your response and a rebuttal into the schedule. If you agree, sign Form 3363; agreeing does not waive the right to sue later. Form 2297 is a separate choice: signing it starts the two-year suit period immediately instead of waiting for the certified letter, which is useful if you intend to go to court and want certainty, and a trap if you sign it reflexively and then let the two years pass during a slow reconsideration. Leave it unsigned unless you have decided. The claim versus abatement page explains why a claim after payment carries rights an abatement request does not, the Form 945-X page covers the overpayment claim itself, and the Appeals guide covers the protest.

Questions about Letter 5376

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