Tens of millions of taxpayers may be entitled to refunds or reductions of penalties and interest the IRS assessed during the COVID-19 federal disaster period — but relief will not come automatically. For most, the window to act closes July 10, 2026.
What sparked the issue
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A recent federal court decision, Kwong v. United States, is at the center of the debate. The case, decided in November 2025, examined a tax code provision governing disaster-related filing and payment deadline postponements.
Filing and payment deadlines are automatically postponed during a federal disaster declaration, plus 60 days. The COVID-19 federal disaster declaration was in effect from Jan. 20, 2020, through May 11, 2023 — extending the tax deadline window to July 10, 2023.
The court’s ruling in Kwong concluded that tax returns and payments due during that entire window were not technically late until after July 10, 2023. By that reasoning, the IRS should not have assessed penalties for late filing or payment during the roughly 3.5-year period, nor charged interest on those amounts.
The government has disagreed with that interpretation, and the Department of Justice is expected to appeal.
Who could qualify
The potential impact is broad. Affected taxpayers could include individuals, small businesses, large corporations, estates and trusts. The issue spans income, employment, estate, gift and excise taxes — and may even affect taxpayers who filed late international information returns, which can carry significant penalties even when no tax is owed.
Taxpayers who may be eligible for refunds or reductions include those who were assessed:
- Failure-to-file penalties
- Failure-to-pay penalties
- Failure to make estimated tax payments
- Interest that accrued earlier than it should have — or at all
- Overpayment interest for the 2020–2023 disaster period
Low- and moderate-income taxpayers face an especially high risk of missing this opportunity, as they are less likely to have professional tax representation and less likely to be aware of complex legal developments like this one.
How to file a claim
In most cases, the IRS will not issue refunds or cancel assessed taxes without a taxpayer-filed claim. Taxpayers generally must file within three years of when they filed their return or two years from the date they paid their tax.
Most taxpayers will need to file using Form 843, Claim for Refund and Request for Abatement, on or before July 10, 2026.
Because the law is still being litigated, taxpayers are also encouraged to file what is known as a protective claim — a way to preserve the right to a refund while the legal question remains unresolved. A protective claim does not require a specific dollar amount. According to the IRS’s Internal Revenue Manual, a valid protective claim must:
- Identify and describe the contingencies affecting the claim
- Be clear enough to alert the IRS to the essential nature of the claim
- Identify the specific year or years for which a refund is sought
To file, taxpayers should use Form 843, write “Protective Refund Claim Pursuant to Kwong Case” — or similar language — across the top, and complete as much detail as possible.
A major hurdle: No electronic filing option
There is a significant practical obstacle for taxpayers seeking relief: Form 843 cannot be filed electronically. It must be submitted on paper.
That means slower processing, no immediate confirmation of receipt and added burden — particularly for taxpayers who cannot easily access a post office or certified mail services. Tax experts advise sending claims by certified mail to create a paper trail proving timely submission.