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Why the IRS Might Owe You Money
Millions of Americans may be eligible for a tax refund thanks to a recent court decision that found taxpayers should not have been charged late penalties or interest during the COVID-19 pandemic .
Under tax code Section 7508A(d), tax deadlines are required to be postponed during federally declared disasters for the duration of the emergency plus 60 days . A U.S. Court of Federal Claims ruled last November in Kwong v. United States that this provision applied to the entire COVID-19 pandemic period .
The court determined that federal tax deadlines should have been postponed from January 20, 2020, through May 11, 2023, plus an additional 60 days. This means the effective deadline for tax filings from 2019, 2020, 2021, and 2022 was extended to July 10, 2023 .
Because the deadlines were legally paused, the IRS may not have had the authority to charge penalties or interest during this period . If you paid such fees, you could qualify for a refund. Estimates suggest billions of dollars are involved, with even major corporations like Western Digital filing lawsuits to recover millions .
Who Is Eligible for the Refund?
Any individual taxpayer or business who was charged IRS penalties or interest between January 20, 2020, and July 10, 2023, may be eligible to ask for a refund .
This could include taxpayers who:
- Filed late or paid taxes after the original deadline but within the extended relief window
- Entered installment agreements during the disaster period and paid interest on those payments
- Incurred failure-to-file or failure-to-pay penalties that accrued during this period
- Made estimated tax adjustments resulting in interest assessments
- Received refunds during this period may also be entitled to unpaid overpayment interest
“The potential dollar amounts could be significant, particularly for businesses that faced liquidity challenges during the pandemic and incurred substantial failure-to-pay penalties,” wrote Jessica Marine, partner at Frost Law .
Why You Must Act Before July 10, 2026
The deadline to file for a tax refund is July 10, 2026 .
Refund claims typically have a three-year statute of limitations from the time the return was filed, or two years from the time the tax was paid, whichever is later . Since the court ruling suggested the tax deadline was effectively July 10, 2023, three years from that date is July 10, 2026 .
“Millions of taxpayers could be eligible, but if people don’t file claims before July 10, 2026, they lose out on the potential for a refund or abatement,” said Jon Wasser, partner at Fox Rothschild .
Experts strongly recommend filing a claim before this date, even if an appeal is ongoing, to avoid losing the right to a refund permanently . The IRS is expected to appeal the ruling, so filing a “protective claim” preserves your right to a refund if the appeal is ultimately successful .
How to Check Your Eligibility and File a Claim
Step 1: Get Your IRS Tax Account Transcript
Taxpayers need to check their tax records to see if the IRS levied any penalties or interest during the disaster period . You can do this by:
- Asking your tax professional to review your records
- Accessing your IRS tax account transcript online by registering for an IRS Individual Online Account
- Ordering a transcript by mail on the IRS website or by calling the automated phone service at 800-908-9946
Tax account transcripts show each year’s tax information, including payments, penalties, and interest with dates they were assessed .
Step 2: Review Your Transcript
Carefully examine your transcript for any penalties or interest charged between January 20, 2020, and July 10, 2023 . If you’re unsure, a tax professional can help.
Step 3: File IRS Form 843
To claim a refund, taxpayers must file IRS Form 843, “Claim for Refund and Request for Abatement” . You can file this form yourself or ask your tax advisor to file it on your behalf .
Crucially, you should specify on the form that it’s a “protective claim” based on the Kwong v. United States decision regarding Section 7508A(d) and the COVID-19 disaster period . This puts your refund request on hold during the appeals process .
Filing a protective claim now acts as a legal placeholder, “freezing” the statute of limitations and ensuring your claim remains valid even if the court case drags on . As Jon Gustafson of Venn Tax and Bookkeeping put it: “Even though you might not get it, because the IRS might win the court case. You might as well try now” .
What Happens Next
The IRS is unlikely to issue these refunds automatically . The outcome remains uncertain as the case continues through the courts, and the IRS will likely appeal the decision . However, filing a timely claim is the only way to guarantee you won’t be barred from a refund due to an expired statute of limitations .
