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What's This About?
A federal court decision from late 2025 — Kwong v. United States — has created a major refund opportunity for tens of millions of taxpayers. The court ruled that, under the tax code's disaster relief provisions (IRC § 7508A), the IRS should not have assessed penalties or interest on late filings or payments made during the COVID-19 federal disaster period.
The COVID-19 disaster declaration was in effect from January 20, 2020, through May 11, 2023 — a nearly 3.5-year window. Add the 60-day extension the law provides, and the total postponement period ran through July 10, 2023. Under the court's reasoning, any filing or payment made during that window wasn't actually late, meaning the IRS had no legal basis to charge penalties or interest.
The IRS disagrees with this interpretation and is expected to appeal. But the court's ruling stands for now — and the clock is ticking on your right to file a claim.
Who Could Be Affected?
This is broader than most people realize. You may have a claim if the IRS charged you any of the following during the COVID period:
- Failure-to-file penalties on late tax returns
- Failure-to-pay penalties on late tax payments
- Estimated tax penalties for underpaying quarterly taxes
- Interest that accrued on late amounts during the disaster period
- Late international information return penalties (which can be substantial even when no tax is owed)
Affected taxpayers include individuals, small businesses, corporations, estates, and trusts — across income, employment, estate, gift, and excise taxes.
What Do You Need to Do?
To preserve your right to a refund, you must file Form 843 (Claim for Refund and Request for Abatement) by July 10, 2026.
A few important points:
- This is not automatic. The IRS will not issue refunds on its own. You must file a claim.
- Form 843 must be filed on paper. There is currently no e-file option for this form.
- Send it by certified mail. The IRS won't send a confirmation receipt. Certified mail gives you proof of timely submission if the form is lost or delayed.
- You don't need to know the exact amount. If the law is still uncertain, you can file a protective claim — essentially a placeholder that preserves your rights until the courts reach a final decision.
What Is a Protective Claim?
A protective claim lets you lock in your deadline without calculating the precise refund amount. Write "Protective Refund Claim Pursuant to Kwong Case" across the top of Form 843, fill in as much detail as you can, and submit it by July 10.
The IRS will hold the claim in suspense until the legal issue is resolved — which could take years. But filing now means you won't be shut out if the courts ultimately rule in taxpayers' favor.
A Fairness Warning
National Taxpayer Advocate Erin Collins has raised serious concerns about who will actually benefit from this ruling. Taxpayers with professional advisors are far more likely to learn about this issue and file on time. Taxpayers without representation — particularly lower-income filers — may never hear about it and lose their rights entirely.
Collins is urging the IRS to publicly notify affected taxpayers before the deadline, grant a six-month extension to file claims, explore providing relief automatically to all eligible taxpayers, and create an electronic filing option for Form 843.
Whether or not the IRS acts, the deadline remains July 10, 2026 — and waiting for the IRS to tell you is not a safe strategy.
The Bottom Line
If the IRS assessed penalties or interest on you at any point from 2020 through mid-2023, you could be owed money back. The legal question is still being litigated, but you must file a claim now to stay in the game. A protective claim costs you little and preserves your rights.
Don't wait. July 10, 2026 is a hard cutoff with no exceptions.
This article is for informational purposes only and does not constitute legal or tax advice. Consult a qualified tax professional about your specific situation.