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. It’s also possible there won’t be a resolution for several years. 

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. And remember: A resolution could take several years. But filing the protective claim reserves your rights while the legal issues play out.

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.

Penalty Type Kwong Strength
1040 late filing Strong
1120-S §6699 late filing Strong
1040/1120 late payment Strong
Estimated tax penalties Moderate to Strong
Payroll return late filing (941/940) Moderate
Payroll deposit penalties Uncertain
Trust fund recovery penalties Weak/Unclear

Tips about How to File

You can find instructions about how to file Form 843 on the IRS’s website.

If you’d prefer a video tutorial, there are several Form 843 how-tos on YouTube, like this one (advice varies video by video, so proceed at your own risk).

A few things to note:

  • Although Form 843 is an editable PDF, you’ll need to send it by certified mail by the July 10, 2026, deadline.
  • It’s not clear if you can use just one form for multiple penalties. So, if you have late filing penalties and interest penalties, you might have to use one form for each.
  • You’ll need to mail the form to the service center where you would be required to file a current-year tax return.
  • On question 8 of the form, provide as much detail as possible as to why you’re requesting a refund.

If you have questions about the ruling or need help filing a protective claim, let us know by July 2.