ACTION NEEDED: Taxpayers May Be Eligible for Refunds and Abatements from 2020-2023

Millions of taxpayers may be entitled to refunds or abatements of penalties and interest that were assessed during the COVID-19 federal disaster period lasting from January 20, 2020 through July 10, 2023, following the landmark Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025) ruling.  However, this relief will not happen automatically.  Because the Kwong case is currently under appeal by the Government, a protective claim filing is required to preserve any right to a refund, which must be filed by July 10, 2026, except for refund claims that can be filed for any payments made within 2 years of the claim.

Background of the Kwong Ruling

The U.S Court of Federal Claims in Kwong interpreted IRC § 7508A(d) as it existed when the COVID-19 federal disaster was declared, holding that certain tax-related deadlines were postponed longer than the IRS had initially published.  The court interpreted IRC § 7508A(d) as creating a mandatory disaster-related postponement period from the COVID-19 federal disaster declaration.

The COVID-19 disaster incident period began on January 20, 2020, and ended on May 11, 2023. Under that interpretation, certain tax-related deadlines may have been extended until 60 days after the end of the disaster incident period, which would have been July 10, 2023. As a result, under the court’s interpretation, certain filing deadlines, payment due dates, and other tax-related deadlines that fell during the COVID-19 disaster period would have been postponed to July 10, 2023.  

This means that many taxpayers who paid failure-to-file penalties, failure-to-pay penalties, or interest accrued from January 20, 2020 through July 10, 2023 may be legally entitled to a refund.  The IRS has disagreed and is appealing the court’s decision in Kwong.

Next Steps to Claim a Refund

The IRS and the Department of Justice are actively appealing the Kwong decision. Because refunds are not being issued automatically, taxpayers must file a protective claim to keep the statute of limitations open while the appellate litigation unfolds. Taxpayers that do not file a claim before the deadline may completely forfeit their right to a refund, even if the government loses the appeal.  The tax years 2019, 2020, 2021, and 2022 can be directly impacted.

Most taxpayers will need to file protective claims on or before July 10, 2026, using IRS Form 843, Claim for Refund and Request for Abatement. To file this claim, IRS Form 843 must be completed correctly in order to preserve all rights. Contact your return preparer or John Schmehl and Stephanie Vogel if you think you may have a claim and would like to preserve your rights before July 10, 2026.