Tens of millions of Americans may be entitled to refunds from the IRS for penalties and interest charged during the COVID-19 pandemic, thanks to a landmark court ruling that could reshape how pandemic-era tax debts are handled. But time is running out to file a claim.
The window to request a refund or abatement closes on July 10, 2026—and the IRS won't be sending anyone a check automatically. Here's what you need to know about who qualifies, how to file, and what the government is doing to fight the ruling.
How the Kwong Ruling Unlocked Pandemic Penalty Refunds
The potential refunds trace back to Kwong v. United States, a November 2025 decision by Judge Molly Silfen of the U.S. Court of Federal Claims. At the heart of the case is a straightforward question: Did the IRS have the authority to charge penalties during the COVID-19 pandemic when federal law automatically extended tax deadlines?
FEMA's COVID-19 disaster incident period ran from January 20, 2020, through May 11, 2023. Under tax law, an additional 60 days is added to that window, pushing the effective relief period to July 10, 2023. The court ruled that the filing and payment deadlines were automatically extended for the entire period—meaning taxpayers who were penalized for late filings or late payments during that 3.5-year span may have been penalized for something that was never actually late.
"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.
The ruling 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 rulings reject the IRS's narrower interpretation that capped pandemic relief at just one year.
Tax professionals say these decisions are also a downstream effect of the Supreme Court's 2024 ruling in Loper Bright Enterprises v. Raimondo, which ended the long-standing Chevron doctrine that required courts to defer to federal agencies' interpretations of ambiguous statutes. Freed from that constraint, courts are now reading tax laws independently—and in Kwong, that reading favored the taxpayer.
Congress also weighed in. In December 2025, lawmakers 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 the court ruling and the new law.
Timeline: From Pandemic Relief to the July 10 Cliff
January 20, 2020 — FEMA declares COVID-19 a federal disaster, triggering automatic tax deadline extensions under IRC Section 7508A.
2020–2023 — The IRS continues assessing late-filing penalties, late-payment penalties, and estimated-tax penalties during the pandemic period—totaling more than $12 billion in fiscal 2022 alone.
2022 — The IRS issues Notice 2022-36, providing limited penalty relief. It refunds about $1.2 billion to roughly 1.6 million taxpayers, but many are left out.
May 11, 2023 — The federal COVID-19 public health emergency ends. Tax law adds 60 days, extending the relief period to July 10, 2023.
2024 — The U.S. Tax Court rules in Abdo v. Commissioner that disaster postponements are mandatory and self-executing.
November 2025 — Judge Molly Silfen issues the Kwong v. United States decision, ruling that pandemic tax deadlines were automatically extended for the full 3.5-year period.
December 2025 — Congress passes the Disaster Related Extension of Deadlines Act, reinforcing the finding.
April 2026 — National Taxpayer Advocate Erin M. Collins publishes a blog post warning that tens of millions of taxpayers may qualify but must act by July 10, 2026.
May 2026 — News outlets including Fortune, CNBC, and The New York Times begin reporting on the deadline, sparking widespread public attention.
July 10, 2026 — The deadline to file Form 843 and preserve your claim.
Why This Matters: The Stakes Behind the Refund Opportunity
The numbers are staggering. 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 the narrower 2022 relief notice. But tax professionals say the legal theory at issue in Kwong reaches far more taxpayers than that earlier relief effort.
"Tens of millions of taxpayers may be entitled to refunds or abatements of COVID-19 period penalties and interest," wrote National Taxpayer Advocate Erin M. Collins in her April 2026 blog post. The affected taxpayers could include individuals, small businesses, large corporations, estates, and trusts. The issue could apply to income, employment, estate, gift, and excise taxes.
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 noted.
However, there's a major caveat: the Kwong ruling is not yet final. 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. Collins said she expects the Department of Justice to appeal, and final resolution could take years.
"The uncertainty of the final outcome makes the July 10 deadline even more critical. 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." — National Taxpayer Advocate Erin M. Collins
Where Things Stand Now: What You Need to Do Today
The clock is ticking. Here's a step-by-step guide to checking your eligibility and filing a claim before the window closes.
Step 1: Check your IRS account transcript. Visit IRS.gov and pull your tax account transcript. Look for penalty or interest charges with dates between January 20, 2020, and July 10, 2023. If you see late-filing penalties, failure-to-pay penalties, or estimated-tax penalties from that period, you may have a claim.
Step 2: Get Form 843. Download IRS Form 843 (Claim for Refund and Request for Abatement) from the IRS website. This is the form you'll need to file.
Step 3: Mark it as a protective claim. Write "Protective Refund Claim Pursuant to Kwong Case" or similar language across the top of the form. This preserves your right to a refund while the legal issue is still being resolved, even if the IRS doesn't act on it immediately.
Step 4: Fill in as much detail as possible. Include the tax period, type of penalty or interest, and the amount you're claiming. You don't need a precise calculation up front for a protective claim, but more detail helps.
Step 5: Mail it by certified mail. Form 843 cannot be filed electronically. The IRS does not provide confirmation that it received paper claims, so certified mail with return receipt is essential to prove you submitted it by the deadline.
Step 6: Send it to the correct address. The mailing address for Form 843 depends on where you live. Check the IRS Form 843 instructions for the correct address.
What Happens Next: The Road Ahead for Pandemic Penalty Refunds
The Department of Justice is expected to appeal the Kwong ruling, meaning the ultimate fate of these refunds could be tied up in litigation for years. The government has argued for a narrower reading of the law, and the appeals process could eventually reach the Supreme Court.
If the appeals court overturns Kwong, taxpayers who filed protective claims by the deadline would still have lost nothing—but they would have preserved their right to a refund if a later decision or legislation restores their eligibility. If the ruling is upheld, the floodgates could open for what tax professionals describe as potentially the largest mass tax refund in IRS history.
Collins has called on the IRS to build an electronic portal to handle what could be a flood of paper filings, but as of now, no such system exists.
The Bottom Line: Key Points to Remember
- The deadline is July 10, 2026 — File Form 843 by this date to preserve your claim.
- It's not automatic — The IRS will not proactively issue refunds. You must file a claim.
- Paper only — Form 843 cannot be filed electronically. Use certified mail.
- Mark it as a protective claim — Write "Protective Refund Claim Pursuant to Kwong Case" on the form.
- No guarantee — The IRS is appealing the ruling. Filing a protective claim preserves your rights while the legal process plays out.
- Widely applicable — Individuals, businesses, estates, and trusts may qualify across multiple tax types.
For most taxpayers, the potential refund is worth the cost of a stamp and a few minutes of paperwork. With billions of dollars in penalties at stake and a hard deadline approaching, the smartest move may be to file now and let the courts sort out the rest.
