Tax season is supposed to be the part of the year you survive, file, and then promptly try to forget. You paid what you were told you owed, possibly including penalties and interest for something that happened during the strangest three years of everyone’s lives, and you moved on. Most people did. The IRS counted on that.
Here’s what the IRS did not send you a letter about: a federal court has ruled that those pandemic-era penalty and interest charges may never have been legally valid in the first place. And if you were hit with them between January 2020 and July 2023, you may be entitled to a refund or an abatement of what you paid. The catch is that you have until July 10, 2026, to file a claim, the IRS is not going to remind you, and missing the deadline means losing the right to that money permanently, even if the courts ultimately rule in taxpayers’ favor.
Nobody mailed you this information. That’s the whole problem.
The situation stems from a U.S. Court of Federal Claims decision in Kwong v. United States, a November 2025 ruling that found some penalties and interest assessed during the nearly 3.5-year COVID-19 federal disaster period may have been improper. Under the reasoning of that ruling, tens of millions of taxpayers may be entitled to refunds or abatements of those amounts.
Judges determined that tax filing and payment deadlines should have been automatically postponed from January 20, 2020, through July 10, 2023, the duration of the COVID-19 disaster declaration, plus an additional 60 days. In the words of National Taxpayer Advocate Erin M. Collins, “by the court’s logic, the IRS should not have assessed penalties for late filing or payment during that 3.5-year period, nor charged interest on those amounts.”
The IRS read the law differently, assessed the penalties anyway, and collected billions of dollars from taxpayers who had no reason to question whether a charge on an IRS notice was legitimate. Two federal courts have now said that reading was wrong.
What the Court Actually Decided
The core of the Kwong ruling turns on a provision of the tax code, Internal Revenue Code Section 7508A, which governs## What the Court Actually Decided
The core of the Kwong ruling turns on a provision of the tax code, Internal Revenue Code Section 7508A, which governs how filing and payment deadlines get postponed during a presidentially declared disaster. The late-2025 court decision held that this provision automatically postponed federal tax filing and payment deadlines for the entire FEMA-declared incident period, plus 60 days. The COVID-19 federal disaster period ran from January 20, 2020, through May 11, 2023. Add the 60 days, and you get July 10, 2023 as the date by which any return or payment during that window should have been considered timely.
The IRS did not see it that way. It accrued interest and penalties as though the statute didn’t exist, taking the position that its administrative notices, a Treasury regulation issued in June 2021, and a one-year cap in the tax code defined the outer limits of available relief. Two courts have now rejected that position.
The Kwong ruling builds on a 2024 U.S. Tax Court decision, Abdo v. Commissioner, which similarly found that the disaster postponement was mandatory and automatic rather than something the IRS could administratively limit. Together, the two decisions set up a direct conflict with how the IRS has been operating, which is why the agency has not quietly agreed to write checks. It is, instead, appealing.
Who Is Potentially Eligible
As CNBC reported in May 2026, National Taxpayer Advocate Erin Collins wrote that “this issue is widespread and not limited to a small or specialized group of taxpayers. Impacted taxpayers represent a broad cross-section of the public, including individuals, small businesses, large corporations, estates and trusts.”
For individual filers, the clearest candidates are people who were assessed a failure-to-file or failure-to-pay penalty on a tax return for any year from 2019 through 2022, where that return was filed or that payment was made late during the COVID disaster window. If you paid failure-to-file, failure-to-pay, or underpayment interest and/or late-payment interest on tax obligations due between January 20, 2020, and July 10, 2023, you may be eligible for a full refund or abatement.
To understand how real those penalty amounts can be: the failure-to-file penalty runs 5 percent of your unpaid taxes monthly, up to 25 percent, while the failure-to-pay penalty is 0.5 percent of your balance monthly, with the same cap. Those numbers compound. For someone who filed late across multiple pandemic years, the accumulated charges could represent a meaningful sum, and the geographic reach is nearly universal, since COVID-19 was a nationwide disaster declaration.
The IRS Is Not Going to Tell You
If you paid federal income tax penalties between 2020 and 2022 and you are reading this before July 10, 2026, there is a good chance you are owed a refund. The catch is that you have to file something to claim it, and the IRS is not going to remind you.
Tens of millions of taxpayers may be entitled to refunds or abatements of penalties and interest that the IRS assessed during the nearly 3.5-year COVID-19 federal disaster period. However, this relief will not happen automatically. To protect their rights, most taxpayers must file a claim for refund, generally by July 10, 2026.
The IRS is appealing the decision and has not begun issuing refunds. A protective refund claim filed now is what locks in your right to a refund if the IRS ultimately loses the case. Without a timely filing, the statute of limitations closes, and the refund window is gone, regardless of how the appeal turns out.
That last point deserves a moment. Even if the courts eventually rule completely in taxpayers’ favor, if you did not file your claim before July 10, 2026, you will not be eligible. The deadline is not tied to when the legal question gets resolved. It is tied to when you acted.
How to Find Out If You Have a Claim
The first step is pulling your IRS account transcripts, which are free and accessible through your online account at IRS.gov. Transcripts summarize your tax payments along with any penalty or interest charges by year. You can create an account on the IRS website using the agency’s ID.me service to register individual or business accounts, and pull the relevant records yourself.
Transcripts can also be requested by mail, which typically takes five to ten days for delivery. Once you have access, look for any penalty or interest charges and check whether the dates associated with them fall in the relevant period between January 20, 2020, and July 11, 2023. The transcripts identify which penalties were assessed, when they were assessed, when they were paid, and how much remains. Without that granular review, it is impossible to determine which penalty assessments fall within the qualifying window.
You don’t need to understand every line on a transcript to do this initial check. You’re looking for one thing: penalty or interest entries with dates that fall inside that window. If the numbers are significant or the years get complicated, a tax professional can run the transcript review and handle the calculation of what’s potentially refundable. It is not always a straightforward arithmetic exercise, particularly if your penalties straddled the disaster window or involved multiple tax types.
How to File a Claim Before the Deadline
The vehicle for your refund or abatement request is IRS Form 843, officially titled “Claim for Refund and Request for Abatement.” If you are claiming Kwong-related refunds for interest and penalties and are not revising your underlying tax liability, you should file a Form 843 and complete the line items including the tax years and the amount of the requested refund. A key distinction: if you have already paid the amounts at issue, you are requesting a refund; if the IRS has assessed penalties and interest but you haven’t paid yet, you are requesting an abatement.
The claim should clearly state that it is based on the COVID-19 disaster relief period and the legal reasoning involved. Taxpayers must generally file a separate Form 843 for each tax period and each type of tax. Multiple years or unrelated issues should not be combined on one form.
Because the Kwong ruling is not yet a final judgment, filing what’s called a “protective claim” is the recommended approach. A protective claim allows you to preserve your right to a refund while the law is still uncertain. To file one, write “Protective Refund Claim Pursuant to Kwong Case” or something similar across the top of Form 843, and fill in as much detail as possible. This language is what signals to the IRS that you are preserving your rights pending the appeal’s outcome, not demanding an immediate payment.
Unlike annual tax returns, Form 843 must be submitted on paper, which National Taxpayer Advocate Collins noted is a slower process, harder to track, and less accessible. Because the IRS does not confirm receipt of these claims, she advised taxpayers to send Form 843 by certified mail, which provides legal proof of mailing and delivery should there be any dispute over whether the form arrived before the deadline.
Mail it to the IRS service center where you would file a current-year return for the tax involved. For an individual income-tax-related matter, that generally means the service center for your Form 1040 filing address.
One practical note: Form 843 is not available through most consumer tax software like TurboTax or H&R Block. You download the current version directly from IRS.gov, complete it by hand or with a PDF editor, and mail it with your supporting documents attached. Keep copies of everything before the envelope goes in the mailbox.
The Part That Is Still Uncertain
None of this comes with a guarantee. The three-year window measured from the extended July 10, 2023, deadline closes on July 10, 2026, and once it closes, the statute of limitations on the refund claim is gone, even if the IRS later loses the Kwong appeal and the underlying legal position is finally accepted.
The U.S. Treasury Department has voiced its disagreement with the court’s decision in Kwong, and further appeals will likely be filed. Even if you have an eligible tax debt, filing Form 843 won’t automatically eliminate it. The IRS will hold protective claims in suspense while the litigation continues, processing them only once there is a final legal resolution. That could take years.
Filing a protective claim does not guarantee a refund, but not filing one guarantees you will not receive one. That asymmetry is what makes the July 10 deadline worth acting on, even with the uncertainty. The cost of preparing and mailing a form is low. The cost of missing the window is permanent.
Read More: Here’s What Your Social Security COLA Could Be in 2026
What to Do Right Now
The situation asks something specific of you: not panic, not certainty, but one concrete action before a fixed date. The Kwong case may or may not ultimately prevail on appeal. The legal question is real and the courts that have examined it have ruled consistently, but the government is fighting it and the outcome is not settled. What is settled is the deadline.
If you received any IRS notice about late penalties or interest between January 2020 and July 2023, whether you paid it or it’s still sitting on your account as an outstanding balance, July 10, 2026, is the date you’re working toward. Log into IRS.gov, pull your account transcripts for tax years 2019 through 2022, and look for penalty and interest entries with dates in that window. If you find them, Form 843, written in clear language tying the claim to the COVID-19 disaster period and the Kwong case, sent certified mail, is how you hold your place in line for a potential refund.
There is something particularly frustrating about a deadline that runs regardless of what the courts decide. You are being asked to act on something the government is actively contesting, before the outcome is known, on a timeline the IRS itself did not publicize. That is not a comfortable position. It is also just the reality of how the statute of limitations works.
The people who will receive refunds, if Kwong prevails, are the people who filed before July 10, 2026. Not the people who waited to see how it turned out, not the people who heard about it a year from now, and not the people who assumed someone would notify them. The tax system has never been set up to remind you of money it owes you. That asymmetry is old and structural and not personal. But knowing that doesn’t move the deadline. What you have right now is information and enough time to act on it. You don’t have to know how this ends. You just have to file before the door closes.
AI Disclaimer: This article was created with the assistance of AI tools and reviewed by a human editor.