IRS Penalty Refunds May Be Available for COVID-Era Tax Filings

If the IRS charged you a penalty during COVID, you might be entitled to a refund. But you need to file a protective claim before July 10, 2026.

Federal Court Decision

In Kwong vs. United States, a federal court ruled that certain tax filing and payment deadlines may have been automatically extended during the COVID disaster period. The IRS has appealed the decision, and there hasn’t been a final resolution yet.

If the decision is upheld, some taxpayers could be entitled to refunds of penalties and related interest that were previously assessed by the IRS. The ruling affects returns from 2019-2022 that were filed between Jan. 20, 2020, and July 10, 2023.

Deadline for Protective Claim

To protect your right to a potential refund, you need to file Form 843 before July 10, 2026. Just because you file a protective claim doesn’t necessarily mean you’ll get a refund. But it preserves your rights while the legal issues play out. You can find instructions about how to file Form 843 on the IRS’s website.

Types of Penalties

If the court’s interpretation stands, it could mean refunds for things like:

• Late filing penalties
• Late payment penalties
• Interest charged on those amounts
• Some estimated tax penalties

These refunds aren’t limited to individuals; business owners and employers could also be affected.

Strength of a Potential Refund

Below is a chart that spells out the type of penalties and the strength of the potential refund.

If you have questions about the ruling or need help filing a protective claim, let us know.