The IRS may owe you back the penalties it charged you during COVID. Here's how to claim yours.

What the Kwong decision actually said

The case turns on one provision: IRC § 7508A(d), the "mandatory postponement" rule Congress added for federally declared disasters. As it existed when COVID was declared, it automatically postpones filing and payment deadlines for the period a federal disaster declaration is in effect, plus 60 days.

Nobody expected a disaster declaration to last 3.5 years. But COVID's did: January 20, 2020 through May 11, 2023. Add 60 days and you land on July 10, 2023.

In Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025), the Court of Federal Claims held that "the plain meaning of that statute is that the automatic extension runs from the beginning of the disaster declaration, through the end of the declared disaster period, and until 60 days after the end of the declared disaster period." Under that logic, returns and payments due anywhere inside that window were not legally late until after July 10, 2023 — which means the IRS should not have assessed failure-to-file, failure-to-pay, or estimated-tax penalties for that period, nor charged interest on those amounts.

The timeline that created the refund window

• 1

  January 20, 2020 — COVID federal disaster declared

  Under IRC § 7508A(d), the mandatory postponement period begins.

• 2

  May 11, 2023 — Disaster declaration ends

  Plus 60 days of additional postponement under the statute.

• 3

  July 10, 2023 — Postponement period ends

  Under Kwong, returns and payments due inside the window first become "late" only after this date.

• 4

  November 2025 — Kwong decided

  Court of Federal Claims adopts the full 3.5-year postponement reading. Government disagrees; appeal expected.

• 5

  July 10, 2026 — General refund-claim deadline for most taxpayers

  Driven by the IRC § 6511 limitations rules. Not universal — see "Missed it?" below.

Who is potentially affected

This is not a niche issue for a special class of taxpayer. Per the Taxpayer Advocate Service, the affected population spans individuals, small businesses, large corporations, estates, and trusts, across income, employment, estate, gift, and excise taxes. If any of these describe you, it's worth pulling transcripts:

Step 1: Find out what you actually paid — pull your transcripts

Before filing anything, know your numbers. Your IRS account transcripts for tax years 2019 through 2022 show every penalty and interest charge, with dates. You can pull them free in minutes through your IRS Online Account.

What to look for on the transcript:

• TC 166 / 276 — late-filing and late-payment penalty assessments (and their dollar amounts)
• TC 196 — interest assessed
• Payment dates — these determine whether your claim window is still open (more on that below)

If you have multiple years, business accounts, or a Revenue Officer involved, a tax professional with a power of attorney can pull every year and every module at once and total the exposure in one pass.

Step 2: File Form 843 — and make it a protective claim

Refunds and abatements in this situation are claimed on Form 843, Claim for Refund and Request for Abatement — one form per tax period. Because the legal issue is still being litigated, the Taxpayer Advocate's guidance is to file it as a protective claim:

1. Complete a Form 843 for each tax year/period where COVID-window penalties or interest were assessed. You don't need to compute an exact refund amount for a protective claim — but include as much detail as you can.
2. Write "Protective Refund Claim Pursuant to Kwong Case" (or similar) across the top of the form, per the Taxpayer Advocate's direction and IRM 25.6.1 protective-claim rules. Identify the contingency — the pending Kwong litigation over IRC § 7508A(d) — and the specific years.
3. Mail it on paper. Form 843 cannot be e-filed. This is the single biggest practical trap in the whole process.
4. Send it certified mail, return receipt requested. Under the timely-mailing-is-timely-filing rule (IRC § 7502), your postmark date is your filing date — and certified mail is your proof if the IRS misplaces a paper claim. Keep copies of everything.
5. Then wait — possibly years. The IRS typically holds protective claims in suspense until the courts resolve the issue, then the claim is "perfected" with final numbers. Filing now simply stops your limitations period from expiring while everyone waits.

Missed July 10, 2026? You may not be out of time

July 10, 2026 was the general "most taxpayers" date — it was never a single universal statutory deadline. Your personal deadline under IRC § 6511 is the later of:

• 3 years from the date you filed the return, or
• 2 years from the date you paid the tax (and each payment starts its own 2-year clock).

That means claims can still be timely after July 10, 2026 for people who paid COVID-era penalties within the last two years — including through installment agreement payments, levies, and refund offsets — for people who filed the underlying returns late, and for people with open audits, appeals, or litigation. We built a dedicated guide for exactly this: Missed the July 10 Kwong deadline? Here's who still has time — and what to do this week.

Kwong vs. the new Automatic Penalty Relief (AEP) — don't confuse them

Two days before the Kwong deadline, on July 8, 2026, the IRS announced its new Automatic Exemption from Penalty (AEP) program. They are completely different animals, and you can potentially benefit from both:

Frequently asked questions

👥 LinkedIn

Romeo Razi, CPA

Former IRS Tax Examiner (Individual & Employment Tax Division) · CPA · 15+ years in private practice

Romeo spent years auditing businesses inside the IRS before switching sides. He's helped clients resolve IRS debts ranging from a few thousand dollars to $440,000. He founded Taxed Right LLC to give everyone access to insider IRS knowledge.