Under Kwong, You May Be Entitled to a Refund or Abatement of Penalties and Interest the IRS Assessed During January 2020 through July 2023

Taxpayers who were assessed penalties and interest by the IRS during January 20, 2020 through July 10, 2023 may be entitled to refunds or abatements as a result of the COVID‑19 federal disaster declaration. The potential relief is significant, but it is not automatic. To preserve your rights, taxpayers should file a claim for refund or abatement by July 10, 2026.

Why this issue is surfacing now

A recent court decision—Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025)—is potentially reshaping how a key Internal Revenue Code provision applies to disasters. As written when the COVID emergency began, Internal Revenue Code § 7508A(d) provides an automatic postponement of filing and payment deadlines while a federal disaster declaration is in effect, plus 60 additional days.

For COVID‑19, the federal disaster declaration ran from January 20, 2020, through May 11, 2023. Adding 60 days extended the postponement period to July 10, 2023. Under Kwong’s reasoning, returns and payments otherwise due at any time in that window were not required to be filed or paid and therefore were not late until after July 10, 2023. The IRS is expected to appeal the Kwong decision, but if that interpretation stands, the IRS should not have assessed late‑filing, non-filing, or late‑payment penalties for obligations due within the federal disaster declaration period.

What this could mean for you

If your filing or payment obligations fell between January 20, 2020, and July 10, 2023, and you were assessed penalties and interest for failing to file on time, failing to pay, or failing to make estimated payments during the period you may be entitled to a refund of that money paid or to have certain assessments removed. It may also include interest that began accruing earlier than it should have—or not at all—along with potential overpayment interest for the 2020–2023 disaster period.

This is not a niche issue. Individuals, small businesses, large corporations, estates, and trusts have all been assessed penalties and interest during these years. If the Kwong interpretation ultimately prevails, affected taxpayers should be eligible for refunds of amounts already paid and abatements of amounts that remain unpaid. For cases still in litigation, the IRS would be constrained from assessing these penalties and interest for the relevant years.

How to claim a refund or abatement

A refund or abatement requires action from the taxpayer. The IRS generally does not issue refunds or abate assessed amounts unless you file a claim. In most situations, a claim must be filed within the later of three years from the date you filed the return or two years from the date you paid the tax. For many taxpayers impacted by the COVID disaster period, that means filing by July 10, 2026.

To claim the refund or abatement, taxpayers should use Form 843, Claim for Refund and Request for Abatement. You can find the form and instructions on the IRS website. Given that litigation is ongoing and appellate guidance may evolve, taxpayers who meet the basic criteria for a refund or abatement under Kwong should consider filing a protective claim to preserve your rights before deadlines pass. A protective claim does not require the IRS to act immediately, but it keeps your refund rights open while the legal issues are resolved.

Next steps

Taxpayers can assess their eligibility for potential refund or abatement by identifying any returns or payments that were due between January 20, 2020, and July 10, 2023 and determine whether there were any penalties or interest associated with those filings. Taxpayers can do this by obtaining copies of their tax transcripts or by reviewing IRS notices assessing penalties or interest tied to those missed or late-filed returns or payments. Evaluate whether those assessments align with the federal disaster declaration period described above. If they do not, prepare and submit Form 843 with a concise explanation referencing IRC § 7508A(d) and the reasoning in Kwong v. United States. Where timing is tight or facts are complex, a protective claim can be a prudent safeguard.

Final thoughts

The potential scope of refunds and abatements from the COVID federal disaster declaration period is vast, but the window to act is not. Mark July 10, 2026, on your calendar, and consider reviewing any penalties and interest associated with your 2020–2023 tax returns and payments as soon as possible. Taking timely steps can preserve your ability to recover penalties and interest that may have been assessed contrary to the statute’s postponement rules.