Most people paid whatever the Internal Revenue Service (IRS) billed them during the pandemic and moved on. A federal judge has now ruled that a significant portion of those charges — failure-to-file and failure-to-pay penalties, plus underpayment interest — should never have been assessed in the first place.
The case is Kwong v. United States (179 Fed. Cl. 382), decided by the U.S. Court of Federal Claims in November 2025. Judge Molly Silfen found that a 2019 statute, Internal Revenue Code Section 7508A(d), automatically suspended all federal tax filing and payment deadlines for the full duration of the COVID-19 federal disaster declaration — from January 20, 2020, through July 10, 2023, plus an additional 60 days. That is three and a half years of deadlines the IRS was legally required to pause, and largely did not.
The IRS issued more than 120 million penalties during that window. Under the court’s reasoning, every one of them is potentially challengeable.
Recover IRS Penalties Charged During the COVID
The scope is unusually broad. National Taxpayer Advocate Erin Collins, who leads the independent watchdog office inside the IRS, described the issue as “widespread and not limited to a small or specialized group of taxpayers.” In a public alert issued April 30, 2026, she wrote that affected parties include individuals, small businesses, large corporations, estates, and trusts — essentially, anyone with a federal tax obligation during the pandemic years.
The penalties in scope are the failure-to-file penalty (5% of unpaid taxes per month, capped at 25%), the failure-to-pay penalty (0.5% of unpaid balance per month, also capped at 25%), and interest on those amounts. Estimated tax penalties may also qualify under the same logic, though that specific application has not yet been litigated.
Potential refunds range from a few hundred dollars for individuals with modest liabilities to tens of thousands for small businesses that carried significant balances through 2021 and 2022.
Taxpayer Advocate Encourages Taxpayers to Claim COVID-Era Refunds Before July 10
“In an April 30 blog post, the National Taxpayer Advocate stated that tens of millions of taxpayers may be entitled to refunds or abatements of penalties and interest the IRS assessed during the… pic.twitter.com/0C91e3D4rF
— Parker Tax Pro Library (@ParkerTax) May 12, 2026
The deadline is real and it is close
Under the three-year statute of limitations set by IRC Section 6511, most affected taxpayers have until July 10, 2026, to file a claim. That date is not arbitrary — it falls exactly three years after July 10, 2023, the end of the disaster period the court identified as the operative filing deadline for COVID-affected returns.
Miss that date and the statute closes permanently. It does not matter whether the IRS ultimately loses the appeal. A taxpayer who failed to file a timely claim will receive nothing, regardless of how the case resolves. Collins was explicit: “Relief won’t happen automatically, and impacted taxpayers generally must take action by July 10.”
There is a narrow exception: Taxpayers who paid their penalties after July 10, 2024, may have a later two-year deadline running from the date of payment. But for the overwhelming majority, the July 10, 2026, cutoff applies.
How to file: Form 843, on paper, by certified mail
The vehicle for this claim is Form 843, “Claim for Refund and Request for Abatement.” There are several non-negotiable requirements. Form 843 cannot be filed electronically. It must be printed and mailed to the IRS service center where the taxpayer would normally send a current-year return.
At the top of every form, write the exact phrase: “Protective Refund Claim Pursuant to Kwong v. United States.” That language converts a standard refund request into a protective claim — meaning it locks in the filing date and preserves the taxpayer’s rights while the IRS appeal is pending, even if the precise refund amount cannot be calculated yet.
More to consider
File a separate Form 843 for each tax year involved. Do not combine 2020 and 2021 on a single form. The IRS requires individual submissions for each period and each penalty type. Send everything by certified mail with return receipt requested. The IRS does not confirm receipt of Form 843, and a missing claim provides no protection. The certified mail receipt is the only documented proof of timely filing.
Before filling out the form, pull IRS account transcripts for tax years 2019 through 2022 from an IRS online account. Those transcripts itemize every penalty and interest assessment by date and amount and are the only reliable way to confirm what is actually recoverable.
