A landmark federal court decision has opened the doors to COVID-era tax refunds for millions of U.S. taxpayers.
In Kwong v. United States, the U.S. Court of Federal Claims determined that the COVID-19 pandemic effectively paused federal tax deadlines from January 2020 through July 2023, giving taxpayers more time to file and pay their taxes than the Internal Revenue Service (IRS) had previously recognized.
The court ruled that the disaster-relief provision in Internal Revenue Code Section 7508A requires the IRS to pause all penalties and interest throughout the entire disaster period, plus an additional 60 days.
That means that while the COVID-19 federal disaster period ran from January 20, 2020, through May 11, 2023, returns and payments weren’t late until after July 10, 2023.
Last week, Erin Collins, the national taxpayer advocate, wrote that tens of millions of taxpayers could be eligible for COVID-era refunds, given that they were hit with penalties or interest for late filings or payments during this period.
“This issue is widespread and not limited to a small or specialized group of taxpayers,” she wrote.
Collins leads the Office of the Taxpayer Advocate, an independent organization within the IRS that helps taxpayers resolve IRS issues and advocates for taxpayers’ rights.
In the blog post, Collins explains that the ruling affects individual taxpayers, small businesses, corporations, trusts, and estates.
She expects the Department of Justice (DOJ) to appeal the court’s decision. However, taxpayers can file a claim for a pandemic-era refund.
Fast Company wrote about the court’s decision in March when it first happened.
Who qualifies for a refund?
Taxpayers may be eligible for refunds or abatements of penalties and interest the IRS assessed during the COVID-19 federal disaster period. This includes taxpayers who were:
- Assessed penalties for failure to timely file returns, failure to pay taxes, or failure to make estimated tax payments;
- Interest that began occurring earlier than it should have, or not at all;
- Overpayment interest for the same time period.
Here’s how to file a refund claim
Tax relief is not automatic. Taxpayers must file a claim.
Collins writes, “Unless the IRS or Congress acts to ensure all affected taxpayers will receive refunds if the Kwong decision is upheld, taxpayers seeking refunds for penalties and interest they paid relating to that period will, in most cases, need to file claims by July 10, 2026.”
Here’s how to check whether you qualify for a refund and file a claim:
- Review your tax records and transcripts through your Individual Online Account on the IRS website.
- Analyze your account activity during the 2020 to 2023 timeframe to verify whether any penalties or interest fees were charged.
- If you’re eligible for a refund, file IRS Form 843.
- File this form by July 10, 2026.
Collins encourages taxpayers to send their forms by certified mail so they can easily prove they submitted a claim on time in case their form gets lost or misplaced.
Millions of Americans filing claims could result in an IRS backlog and lengthy delays.