Tens of millions of taxpayers may be able to get money back from the IRS for certain penalties and interest they were charged during the COVID-19 pandemic, according to a recent blog post from National Taxpayer Advocate’s Erin M. Collins.
But the refunds are not automatic, and most taxpayers who may qualify need to file a claim by July 10.
The stakes are significant. In fiscal 2022 alone, the IRS levied more than 12 million estimated-tax penalties and over 16 million failure-to-pay penalties totaling more than $12 billion. The IRS previously refunded about $1.2 billion in penalties to roughly 1.6 million taxpayers under a narrower 2022 relief notice, but tax professionals say the legal theory at issue here reaches far more taxpayers.
Why the IRS may owe refunds
The possible refunds stem from Kwong v. United States, a November 2025 ruling by Judge Molly Silfen of the U.S. Court of Federal Claims that turned on how long pandemic-era tax deadlines were paused.
FEMA’s COVID-19 disaster incident period ran from Jan. 20, 2020, through May 11, 2023, and tax law added another 60 days, extending the period to July 10, 2023, for tax purposes.
In Kwong, the court interpreted the law to mean that the filing and payment deadlines were automatically extended for the entire 3.5-year window.
“The plain meaning of that statute is that the automatic extension runs from the beginning of the disaster declaration, through the end of the declared disaster period, and until 60 days after the end of the declared disaster period,” the court wrote.
If that view holds up, taxpayers who were charged late-filing or late-payment penalties or interest during the COVID period may have been charged on returns and payments that, by the court’s reading, were never actually late.
The ruling did not come out of nowhere. It builds on a 2024 U.S. Tax Court decision, Abdo v. Commissioner, which similarly held that the disaster postponement was mandatory and self-executing. Together, the two decisions reject the IRS’s narrower regulatory reading that capped pandemic relief at one year.
Tax practitioners say the cases are also a downstream effect of the Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo, which ended the longstanding Chevron doctrine requiring courts to defer to federal agencies’ readings of ambiguous statutes. Courts now interpret tax statutes independently—and in Kwong, that reading favored the taxpayer.
Taxpayers may also have a second, independent legal basis for some claims. In December 2025, Congress passed the Disaster Related Extension of Deadlines Act (P.L. 119-64), which requires the IRS to treat disaster-related postponements as extensions of return deadlines for refund-lookback purposes. A properly filed claim can rely on both.
Who could qualify
The affected taxpayers could include individuals, small businesses, large corporations, estates, and trusts. The issue could apply to several kinds of taxes, including income, employment, estate, gift, and excise taxes, according to Collins.
In other words, if you filed or paid certain taxes late during the pandemic period and the IRS charged you penalties or interest, you may want to check whether you have a potential claim.
Taxpayers who filed late international information returns may also be affected, because those filings can come with large penalties even when no tax is owed, Collins said.
How to check and file a claim
A good first step is to review your IRS account transcript, which shows penalties, interest, payments, account adjustments, and refunds, according to the Taxpayer Advocate Service. Taxpayers should look for penalty or interest charges and check whether the dates fall between Jan. 20, 2020, and July 10, 2023.
To request a refund or reduction, taxpayers generally use IRS Form 843, Claim for Refund and Request for Abatement, to claim a refund or request an abatement of certain taxes, interest, penalties, fees, and additions to tax.
Collins said taxpayers should also consider filing a protective claim, which preserves their right to a refund while the legal issue is still being resolved. To file one, taxpayers would write “Protective Refund Claim Pursuant to Kwong Case” or similar language across the top of Form 843.
But Form 843 cannot be filed electronically. Taxpayers must mail it on paper, and the IRS does not provide confirmation that it received the claim. Collins recommends sending claims by certified mail, and has called on the IRS to build an electronic portal to handle what could be a flood of filings.
The important caveat
There is no guarantee taxpayers will get money back.
The Kwong ruling is not yet a final, appealable judgment—as of early May 2026, the parties were preparing a stipulated judgment that would clear the way for the government to appeal to the U.S. Court of Appeals for the Federal Circuit, according to tax practitioners tracking the case. The government has argued for a narrower reading of the law, and Collins said she expects the Department of Justice to appeal. Final resolution could take years.
Still, the deadline matters. If taxpayers wait too long to file a claim, they may lose the chance to get a refund later if the courts ultimately side with taxpayers.
For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.
