A recent federal court case, Kwong v. United States, may create an opportunity for some taxpayers to seek refunds or relief from certain IRS penalties and interest charged during the COVID-19 period. In simple terms, the court said many federal tax deadlines may have been automatically pushed back longer than the IRS had recognized. If that reasoning ultimately stands, some taxpayers may have paid penalties or interest they did not actually owe.
According to the court’s interpretation, certain federal tax filing and payment deadlines that fell during the COVID-19 disaster period may have been postponed from January 20, 2020, through July 10, 2023. That matters because penalties and interest are often based on when a return or payment was due. If the legal due date was later than the IRS used, some charges may be open to challenge.
Who May Want to Take a Closer Look
- Taxpayers who paid failure-to-file or failure-to-pay penalties tied to federal deadlines during the COVID-19 period
- Taxpayers who paid underpayment interest connected to those same deadlines
- People or businesses who may have refund claims affected by filing deadlines during that time
- Taxpayers who want to preserve their rights while the law continues to develop
- Note that this only applies to Federal penalties and interest, not state
What Taxpayers Should Do Now
If you paid IRS penalties or interest related to returns or payments due during the COVID-19 period, it may be worth reviewing your account. Gather notices, payment records, and filing dates for the years involved. Then consider talking with a qualified tax professional about whether you may have a refund or abatement claim, and whether you should file a protective claim using Form 843 to preserve your rights while appeals or further guidance play out. The due date to mail the claim is July 10th, 2026 and cannot be electronically signed or filed.
Important Caution
This is an important case, but it does not guarantee a refund. The decision came from the U.S. Court of Federal Claims, and the legal issues may continue to develop through appeals or additional guidance and could take years to play out. In other words, the case creates a potential opportunity, not a guaranteed result.
Bottom Line
The Kwong case may give some taxpayers a reason to revisit IRS penalties, interest, or refund deadlines tied to the COVID-19 period. If you think you may be affected, a timely review could help you decide whether any action is worth taking. Contact our Tax Department to discuss your situation.