Somewhere between January 2020 and July 2023, the IRS charged you a penalty — for filing late, for paying late, for underpaying your estimated taxes — during a period when, according to a federal court, the agency had no legal authority to charge that penalty at all. If that describes you, the government may owe you a refund, plus interest. The catch is that nobody is going to mail you a check. You have to ask for it, in writing, on a specific paper form, before July 10, 2026. After that date, for most affected taxpayers, the window closes permanently regardless of how the underlying legal fight eventually resolves.

This is one of the more significant and least understood tax stories of 2026, and most of the coverage of it online falls into one of two unhelpful categories: brief, vague mentions that gesture at “court rulings” without explaining what actually happened, or landing pages for paid “refund recovery” services that take a 20–25% cut of whatever you’re owed for filling out a form that, in the overwhelming majority of cases, you can complete yourself in under an hour at no cost. This article is neither. It explains exactly what the courts ruled, why it happened, who’s actually affected, and walks through the real Form 843 filing process — the same one the National Taxpayer Advocate, CPA firms, and tax attorneys are using — so you can file your own protective claim without giving away a quarter of your refund to a middleman.

How the IRS Ended Up Owing People Money It Already Collected

To understand why this situation exists, you need to understand a single, specific provision of the tax code: Internal Revenue Code Section 7508A(d). This provision says that when the federal government formally declares a disaster, certain federal tax filing and payment deadlines are automatically postponed for the duration of that disaster declaration, plus an additional 60 days. The postponement isn’t discretionary and it isn’t something a taxpayer has to apply for — under the statute’s plain text, it happens automatically for anyone affected by the declared disaster.

COVID-19 triggered exactly this kind of federal disaster declaration, issued under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. FEMA’s COVID-19 disaster incident period ran from January 20, 2020 through May 11, 2023 — more than three years. Add the statutorily required 60-day tail required by Section 7508A(d), and the postponement period, as later interpreted by a federal court, extended all the way to July 10, 2023.

For most of that period, the IRS did offer some pandemic-related relief — well-publicized extensions of the regular April filing deadline in 2020 and 2021, for instance, and a narrower 2022 penalty relief notice that refunded roughly $1.2 billion to about 1.6 million taxpayers. But that administrative relief was much narrower, much shorter, and much more selectively applied than what Section 7508A(d) actually requires by its text. Outside those specific administrative windows, the IRS continued to assess failure-to-file penalties, failure-to-pay penalties, estimated tax underpayment penalties, and interest on millions of returns with due dates falling inside the full 3.5-year disaster window — treating those deadlines as if they had never been postponed at all.

Two separate court decisions have now said that was wrong.

Abdo v. Commissioner (2024)

The first crack in the IRS’s position came from the U.S. Tax Court in Abdo v. Commissioner, decided in 2024. The court examined the same statutory question — whether Section 7508A(d)‘s automatic postponement provision applied to a taxpayer’s situation during the COVID disaster period — and ruled that the IRS lacked the legal authority to assess late-filing and late-payment penalties for deadlines that fell within the declared disaster window. It was a single case, with a relatively narrow factual record, but it established the legal theory that would become central to everything that followed.

Kwong v. United States (November 2025)

The decision that actually opened the door for tens of millions of taxpayers came over a year later, in Kwong v. United States, decided by the U.S. Court of Federal Claims on November 25, 2025 (179 Fed. Cl. 382). Judge Molly Silfen’s ruling went further than Abdo in a critical way: it held that the postponement under Section 7508A(d), as the statute existed at the time, applied automatically to every taxpayer affected by the COVID disaster declaration — not as a case-by-case factual determination, but as a blanket statutory rule covering the full window from January 20, 2020 through July 10, 2023.

The Kwong case itself arose from a fairly narrow procedural question: whether Mr. Kwong’s lawsuit, filed in February 2023, was filed within the statute of limitations for a tax refund claim. The court’s answer required it to determine when Kwong’s filing deadline actually was — and to answer that, it had to interpret what Section 7508A(d) did to deadlines during the COVID disaster period. The court concluded that the postponement period covered the entire window through July 10, 2023, which meant Kwong’s February 2023 lawsuit was timely. As several tax attorneys and the IRS’s own National Taxpayer Advocate have since noted, the decision technically resolved a timeliness question rather than directly ruling on every penalty assessed during the period — but the legal logic underlying it applies broadly: if deadlines were automatically postponed by statute, then penalties and interest tied to those deadlines should not have been charged in the first place. Tax professionals across the country have been using that logic to build refund claims for clients ever since the ruling came down.

Erin M. Collins, the National Taxpayer Advocate — an independent watchdog office within the IRS itself, separate from IRS leadership — wrote in an April 2026 blog post that by the court’s logic, the IRS should not have assessed penalties for late filing or late payment during that 3.5-year period, nor charged interest on those amounts. That’s about as close to an official IRS-adjacent endorsement of the theory as exists, even though the IRS as an agency disputes it and has appealed the ruling.

Why the IRS Hasn’t Just Started Issuing Refunds

If a federal court ruled the agency lacked legal authority to charge these penalties, why hasn’t the IRS simply started mailing checks? Three reasons, and understanding all three is important for setting realistic expectations about this process.

First, the IRS is appealing the Kwong decision. The case would go to the U.S. Court of Appeals for the Federal Circuit, and as of this writing the government had not yet formally filed that appeal, though legal observers across the tax bar widely expect it to. Until the appeal is resolved — which realistically could take years — the legal question remains open at the highest binding level.

Second, Kwong is a Court of Federal Claims decision, not a Supreme Court or appellate court ruling. It’s influential and it’s being cited extensively by practitioners building refund claims, but it isn’t binding on every other court or on the IRS nationwide the way a Supreme Court decision would be. The IRS is entitled to continue disputing the underlying legal theory while the appeal plays out.

Third — and this is the part that actually matters for your decision about whether to act now — this is explicitly not a class action. There is no court-ordered, IRS-administered process where affected taxpayers are automatically identified and paid. The only mechanism for getting your money back is filing an individual claim. The IRS isn’t going to cross-reference its own penalty assessment records against the Kwong ruling and proactively refund anyone. The burden is entirely on each affected taxpayer to file the right paperwork by the deadline.

This combination — a real legal ruling in taxpayers’ favor, an active government appeal, and zero automatic processing — is exactly why the National Taxpayer Advocate and virtually every tax professional covering this story are recommending the same specific action: file a protective claim now, regardless of how the appeal eventually turns out, because missing the deadline forecloses the opportunity permanently while the appeal is still pending.

Who Actually Qualifies for the refund

You may be eligible for a refund or abatement if you were assessed any of the following penalties or interest charges, tied to a filing or payment deadline that fell between January 20, 2020 and July 10, 2023:

Failure-to-file penalties. Charged when a tax return — individual, business, partnership, or otherwise — was filed after its due date. This is typically the steepest of the common penalties, calculated at 5% of unpaid tax per month (up to a 25% cap), and it’s the penalty most likely to generate a meaningful refund if it was wrongly assessed.

Failure-to-pay penalties. Charged when tax owed wasn’t paid by the due date, even if the return itself was filed on time. Calculated at 0.5% per month of unpaid tax, up to a 25% cap. Lower per-month than the failure-to-file penalty, but it compounds over the same multi-year window many pandemic-era balances sat unpaid.

Estimated tax penalties. Charged to taxpayers — disproportionately self-employed individuals, freelancers, gig workers, and small business owners — who didn’t pay enough in quarterly estimated taxes throughout the year. In fiscal year 2022 alone, the IRS levied more than 12 million estimated-tax penalties.

Late-filing penalties on international information returns. This covers a category many domestic-focused coverage of this story misses entirely: penalties on forms like Form 5471 (foreign corporations), Form 3520 (foreign trusts and gifts), and Form 8938 (foreign financial assets), which carry penalties that are often dramatically larger than domestic filing penalties — sometimes $10,000 or more per form, per year. U.S. citizens living abroad, in particular, are a population the National Taxpayer Advocate has specifically flagged as likely eligible and likely underaware of this opportunity, given how common embassy closures, postal disruptions, and general pandemic-era disorganization were for American expats trying to meet U.S. filing obligations from overseas.

Underpayment interest. Interest the IRS charged on any unpaid balance during the disaster window. Because interest compounds over the multi-year period many balances went unresolved, this can represent a meaningful share of the total refund in cases where a penalty sat unpaid (and accruing interest) for an extended stretch.

You don’t need to have filed a lawsuit, hired an attorney, or done anything unusual to potentially qualify. If you simply paid a tax bill late during the pandemic, paid it on time but the underlying return was late, or underpaid your quarterly estimates while self-employed during those years, you’re in the pool of people the National Taxpayer Advocate estimates could number in the tens of millions.

Certain groups are statistically more likely to have been affected. Anyone who earned income outside a traditional W-2 job during the pandemic — gig workers, freelancers, independent contractors, small business owners — faced more complicated tax obligations and a meaningfully higher likelihood of late filing, late payment, or estimated tax shortfalls during a period when, frankly, a global pandemic was actively disrupting everyone’s ability to manage paperwork on schedule. Americans living abroad face a similarly elevated likelihood given the international information return penalties described above. And anyone who simply had a late return or late payment for any reason during 2020, 2021, 2022, or the first half of 2023 — job loss, illness, business disruption, or plain pandemic-era chaos — falls squarely within the affected window.

What an Average Refund Looks Like

Refund amounts vary enormously based on how much tax was involved, how late the return or payment was, and how long interest accrued before the balance was resolved. Industry estimates for an average individual refund have circulated in the low thousands of dollars, though that average obscures wide variation — someone with a small balance and a short delay might be owed a few hundred dollars, while a small business owner who carried a larger unpaid balance through multiple penalty cycles, or someone with an international information return penalty, could be owed many thousands.

The way to find your actual number, rather than guess from an average, is to pull your own IRS account transcripts for each affected tax year. These transcripts show every penalty and interest charge the IRS assessed against you, with dates, which lets you identify exactly which charges fall inside the January 20, 2020 to July 10, 2023 window. You can request transcripts for free directly through your IRS Online Account at IRS.gov, or by mail using Form 4506-T. This is also the first concrete step several CPA firms and tax attorneys recommend before filing anything — know your numbers before you file your claim.

How to File Form 843 Yourself (And Why You Probably Don’t Need to Pay Someone Else to Do It)

The vehicle for this entire process is IRS Form 843, “Claim for Refund and Request for Abatement.” It’s a single-page form that exists specifically for requesting the IRS reverse a penalty, interest charge, or certain other amounts already assessed or paid — distinct from Form 1040-X, which is used when you’re correcting your actual tax liability rather than disputing a penalty.

A few structural facts about Form 843 matter before you start. The IRS redesigned the form in December 2024, so the current version is Form 843 (Rev. 12-2024) — if you’re working from an old PDF you saved years ago or a screenshot in an outdated article, the line numbers won’t match. Always download the current version directly from IRS.gov. The form cannot be e-filed; it must be submitted on paper, by mail. And you generally need to file a separate Form 843 for each tax year and each type of tax involved — don’t combine multiple years or unrelated penalty types onto a single form unless the instructions specifically allow it.

Here’s the step-by-step process:

Step 1: Pull your IRS account transcripts. Log into your IRS Online Account at IRS.gov and request transcripts for each tax year between 2019 and 2022 (covering returns and payments due in the 2020–2023 window). These transcripts list every penalty and interest charge assessed against you, with the specific dates, which is what you’ll need to fill out the form accurately. You’re looking specifically for transaction codes related to failure-to-file penalties, failure-to-pay penalties, estimated tax penalties, and interest assessments with dates falling between January 20, 2020 and July 10, 2023.

Step 2: Download the current Form 843 from IRS.gov. Confirm it’s the Rev. 12-2024 version. The redesigned form has your reason for filing as a set of checkboxes at the very top, above your name and address, grouped under categories for Tax, Penalty, Interest, and Other. You’ll check the box corresponding to “Penalty” if you’re seeking abatement or refund of a penalty assessed due to reasonable cause or another reason allowed under law.

Step 3: Complete the identifying information. Your name, address, Social Security number (or EIN if this is a business claim), the tax period(s) involved, and the type of tax (individual income tax, employment tax, etc.).

Step 4: Indicate whether you’re requesting a refund or an abatement. This distinction matters: if you already paid the penalty or interest in question, you’re requesting a refund, and you should enter the date you made that payment. If the IRS has assessed the penalty but you haven’t yet paid it, you’re requesting an abatement instead — essentially asking the IRS to cancel the charge before you have to pay it.

Step 5: Write the protective claim language across the top of the form. This is the single most important detail in the entire filing, and it’s the language the National Taxpayer Advocate’s own guidance recommends: write “Protective Refund Claim Pursuant to Kwong v. United States” in clear, legible text across the top of the form, above the checkboxes. This language signals to the IRS exactly why you’re filing and what legal basis your claim rests on, and it’s what preserves your right to a refund while the underlying appeal is still being litigated.

Step 6: Complete the explanation field (Line 8 on the current form). This is where you lay out the substance of your claim in writing. A model explanation, adapted from language several CPA firms and the National Taxpayer Advocate’s own guidance have used, reads approximately: “Taxpayer requests abatement and refund of failure-to-file penalties, failure-to-pay penalties, and related interest for tax year [YEAR]. This claim is based on IRC § 7508A(d) and the decision in Kwong v. United States, 179 Fed. Cl. 382 (Nov. 25, 2025), which held that federal tax filing and payment deadlines were automatically postponed during the COVID-19 disaster period (January 20, 2020 through July 10, 2023). Because the applicable deadlines were postponed, the penalties and interest assessed for this period were improperly applied. This claim is filed as a protective claim under § 6511 pending final resolution of the government’s appeal.” Adjust the specific penalty types and tax year to match your situation.

Step 7: Sign and date the form. If you filed a joint return for the year in question, both spouses generally need to sign. The redesigned form also includes a space for an Identity Protection PIN if you have one enrolled.

Step 8: Mail it — by certified mail, with a return receipt. This step is not optional in any practical sense. Because Form 843 can’t be e-filed, your only proof that you met the July 10, 2026 deadline is your mailing record. If the IRS later claims it never received your form — which happens more often than you’d expect with paper filings during high-volume periods — certified mail with a return receipt is your evidence that you filed on time. Keep that receipt indefinitely. Mail the form to the IRS service center associated with where you’d file a current-year return for the tax type involved; if you’re responding to a specific notice the IRS previously sent you about the penalty, mail it instead to the address listed on that notice.

Step 9: Keep copies of everything. The completed Form 843, your transcripts, the original IRS notice that assessed the penalty (commonly a CP14, CP161, or CP504 notice), proof the penalty was actually paid (bank records or canceled checks), and your certified mail receipt. Form 843 claims can take three to six months or longer to process, especially as the July 10 deadline approaches and IRS service centers see a predictable surge in filings.

The Protective Claim Concept on refund, Explained Simply

A detail that confuses a lot of people reading about this story for the first time: you do not need to know your exact refund amount, and you do not need the underlying legal appeal to be resolved, before you file. That’s the entire point of a “protective claim.”

Under IRS procedures (specifically IRM 25.6.1.10.3.2.5(2) and IRM 21.5.3.4.7.3), a valid protective claim has to do three things: identify and describe the legal issue affecting the claim (here, that’s Kwong and the Section 7508A(d) postponement theory), clearly alert the IRS to the basis of the claim, and identify the specific tax year or years involved. It does not require you to calculate an exact dollar amount or demand an immediate payout. Filing a protective claim essentially puts a placeholder in line — it preserves your legal right to pursue the refund once the Kwong appeal is finally resolved, without requiring you to fully litigate or quantify anything right now.

This matters enormously given the timeline mismatch at the heart of this whole situation: the appeal could easily take years to resolve, but your individual right to claim a refund expires July 10, 2026 if you haven’t filed something by then. The protective claim is specifically designed to solve that mismatch — file now to preserve the right, regardless of how long the appeal takes to play out.

Should You Pay a Service to Do This For You?

Several companies have built business models specifically around this situation, marketing themselves as eligibility-checking and filing services that take a percentage of whatever refund you eventually receive — commonly in the range of 20–25%, charged only if you’re paid. Some operate as software tools built by CPAs; others are tax resolution firms charging flat fees (commonly cited around $250 per form) to prepare and certified-mail the filing for you.

For some taxpayers, paying for this kind of help makes sense — particularly business owners with complex multi-year penalty histories across several entities, anyone juggling international information return penalties on top of domestic ones, or anyone who simply doesn’t have the time before July 10 to pull transcripts and complete the paperwork themselves. A flat-fee CPA or tax attorney engagement, where you know the cost upfront regardless of outcome, is generally the more transparent and often cheaper option compared to a percentage-of-recovery arrangement, particularly for a refund of any meaningful size — 25% of a $5,000 refund is $1,250, which is considerably more than most flat-fee preparation services would charge for the same single-page form.

For the majority of individual taxpayers with a straightforward situation — one or two affected tax years, a domestic individual return, no business entities or international filings involved — the process described above is genuinely something most people can complete themselves in well under an hour once they have their transcripts in hand. The form is one page. The protective claim language is a fixed phrase you copy verbatim. The explanation paragraph is a template you fill in with your specific tax year and penalty type. There’s no legal expertise required to write “Protective Refund Claim Pursuant to Kwong v. United States” across the top of a government form and mail it certified.

Be specifically wary of any service that asks you to grant broad access to your full IRS records and tax history before telling you anything about what you might be owed, that charges anything upfront regardless of outcome without clearly disclosing that cost, or that creates artificial urgency beyond the genuine July 10 deadline that already exists. Any time there’s news about IRS refunds, opportunistic actors follow — and a real, IRS-acknowledged legal opportunity like this one is exactly the kind of story that attracts both legitimate paid services and less scrupulous ones. The National Taxpayer Advocate’s own guidance suggests considering a tax professional if your situation genuinely warrants it (multiple years, multiple entities, complex penalty histories) but doesn’t suggest the average individual taxpayer needs one for a straightforward claim.

What Happens After You File for the refund

Filing your protective claim doesn’t produce an immediate refund. Realistically, here’s the sequence: the IRS will process your Form 843 alongside the broader backlog of Kwong-related claims, likely taking three to six months or longer given current processing timelines and the surge of filings expected as the July deadline approaches. Separately and on its own timeline, the government’s appeal of the Kwong decision will work its way through the U.S. Court of Appeals for the Federal Circuit — a process that, based on typical federal appellate timelines, could easily take one to two years or more, with the possibility of further appeal to the Supreme Court after that.

If the Federal Circuit upholds Kwong, or if the government doesn’t appeal at all, the IRS would presumably need to begin processing the backlog of protective claims filed before the deadline, at which point taxpayers who filed correctly and on time would be positioned to receive their refunds plus interest. If the Federal Circuit overturns Kwong, the underlying legal theory weakens substantially, and the disposition of pending protective claims becomes considerably less certain — though even in that scenario, having filed by the deadline preserves whatever rights exist rather than having forfeited them by missing the window.

There’s a genuine, acknowledged degree of uncertainty here that no responsible piece of writing about this topic should paper over: filing a protective claim is not a guarantee of a refund. It’s the only way to remain eligible for one if the legal theory ultimately prevails. The asymmetry that matters is this: filing costs you a stamp, an hour of paperwork, and patience. Not filing costs you the opportunity entirely, permanently, regardless of how the underlying legal question is eventually resolved.

A Closer Look at Each Penalty Type and What Refund You Might Actually Be Owed

The generic advice to “check if you were charged a penalty” undersells how different these penalty categories actually are in size, mechanics, and likelihood of triggering a meaningful refund. Understanding the math behind each one helps you estimate, roughly, whether pursuing a claim is worth your time before you even pull your transcripts.

Failure-to-file penalty mechanics. This is calculated at 5% of the unpaid tax for each month or partial month the return is late, capped at 25% of the unpaid balance. If your return was substantially late — filed, say, in late 2021 for a 2020 return that was originally due in 2020 — and you owed a meaningful balance, the failure-to-file penalty alone could have reached the full 25% cap. For a taxpayer who owed $8,000 in tax and filed roughly six months late, the failure-to-file penalty would have been calculated at up to $2,000 (capped at 25% of unpaid tax), a sum that, if assessed during the disaster window, represents a real and recoverable amount.

Failure-to-pay penalty mechanics. Calculated at 0.5% per month of unpaid tax, also capped at 25%, this penalty is smaller per month than the failure-to-file penalty but compounds over longer periods since it applies for every month a balance remains unpaid — and many taxpayers carried pandemic-era balances unresolved for a year or more. A taxpayer who owed $10,000 and didn’t fully pay it off for 18 months would have accrued a failure-to-pay penalty of up to $900 (18 months × 0.5%), assuming the cap wasn’t reached, plus whatever interest accrued on top.

Estimated tax penalty mechanics. Unlike the two penalties above, this one isn’t a flat percentage — it’s calculated more like an interest charge, based on the federal short-term rate plus 3 percentage points, applied to each quarter’s shortfall from the date it was due until it was paid or until the return’s due date. Self-employed taxpayers, freelancers, and small business owners with irregular income are disproportionately affected by this penalty because their income (and therefore their correct quarterly estimate) is harder to predict than a W-2 employee’s withholding.

International information return penalties. These dwarf the domestic penalties in raw dollar terms. A late Form 5471 (reporting interests in foreign corporations) can carry a $10,000 penalty per form, per year, with additional penalties if the late filing continues after IRS notice. Form 3520 (foreign trusts and large gifts from foreign persons) penalties can run to the greater of $10,000 or a percentage of the transaction value, sometimes reaching tens of thousands of dollars for a single late filing. If you’re an American living abroad, or someone with foreign trust, gift, or corporate interests who filed any of these forms late during the disaster window, this is the single highest-value category to check first.

Interest. Calculated at the federal short-term rate plus 3 percentage points, compounded daily, on whatever balance remained unpaid. For a balance that sat unresolved for two or three years during the disaster period — not unusual for taxpayers dealing with pandemic-era financial disruption — accrued interest alone can represent a substantial share of what’s recoverable, sometimes exceeding the underlying penalty itself.

Three Illustrative Scenarios

Because abstract penalty math is hard to translate into “should I bother filing,” here are three illustrative (not actual) scenarios showing how this might play out for different kinds of taxpayers.

Scenario one: The freelancer who filed late in 2021. A graphic designer who transitioned to full-time freelance work in 2020 didn’t realize she owed quarterly estimated taxes and filed her 2020 return four months late, in August 2021, owing $6,000 in tax. She paid a failure-to-file penalty (capped around $1,200 for the delay), a smaller failure-to-pay penalty, and roughly $400 in accrued interest by the time she settled the balance in early 2022 — a combined penalty and interest exposure in the range of $1,800 to $2,000, all assessed for a return due squarely within the disaster window.

Scenario two: The small business owner with a late partnership return. A two-person LLC filed its 2021 partnership return five months late due to bookkeeping disruptions during a pandemic-era staffing shortage, triggering a failure-to-file penalty under IRC § 6698 calculated per partner, per month late — a penalty structure that can add up to several thousand dollars even for a business with modest tax liability, because the partnership-return penalty is calculated differently from the individual income tax penalty.

Scenario three: The American living in Portugal. A U.S. citizen working remotely from Lisbon filed her 2020 Form 8938 (reporting foreign financial assets) two months late because of a closed consulate and mail disruptions, triggering a penalty in the thousands of dollars for a filing that, by dollar value of the actual underlying assets, represented no tax owed at all — purely a reporting delay penalty, which under the Kwong theory should not have been assessed given the deadline postponement.

In all three cases, the common thread is the same: a deadline that fell inside the January 20, 2020 to July 10, 2023 window, a penalty assessed against that deadline, and a viable claim under the Kwong theory regardless of whether any underlying tax was ultimately owed.

Documents to Gather Before You Start

Assembling the right paperwork before you sit down to complete Form 843 will save you from having to stop mid-process and dig for something you’re missing. For each tax year you’re filing a claim for, gather:

Your IRS account transcript for that tax year, pulled from your IRS Online Account or requested via Form 4506-T, showing the specific penalty and interest transaction codes and dates.

The original IRS notice that informed you of the penalty assessment — commonly a CP14 (balance due notice), CP161 (penalty notice for partnerships and certain entities), or CP504 (notice of intent to levy). If you no longer have the physical notice, the transcript will show the same information in coded form, but having the original notice makes your claim’s documentation more complete.

Proof that you actually paid the penalty, if you’re filing a refund claim rather than an abatement request — this can be a bank statement showing the payment, a canceled check, or an IRS payment confirmation.

A copy of the underlying tax return that triggered the assessment, showing the original due date and the date it was actually filed or the balance was actually paid.

Your prior correspondence with the IRS about the penalty, if any exists — including any previous penalty abatement requests, whether granted or denied, since this history is relevant to how your new claim will be evaluated.

State Tax Implications

A detail that’s frequently overlooked in coverage of this story: Kwong v. United States addresses federal tax penalties and interest under federal law. It says nothing directly about state tax penalties, which are governed by separate state statutes and, in many cases, separate state-level disaster postponement provisions that may or may not mirror the federal rule.

Many states have their own versions of automatic disaster-related deadline postponement, and many conformed their pandemic-era filing deadlines to the federal extensions the IRS announced administratively. Whether your state’s tax authority would honor a parallel theory to Kwong for state-level penalties is a separate legal question entirely, governed by your specific state’s statutes and any state court decisions addressing the issue — which, as of this writing, are far less developed than the federal litigation. If you paid state-level late-filing or late-payment penalties during the same window and believe a parallel argument might apply, that’s worth raising specifically with a state tax professional or your state’s taxpayer advocate office, since the federal Form 843 process described in this article doesn’t touch state liability at all.

What This Doesn’t Cover

It’s worth being precise about the boundaries of this opportunity, because overstating its scope is exactly the kind of thing that fuels both false hope and predatory marketing.

This is not a stimulus payment, and it’s not a new round of Economic Impact Payments. It’s not connected to the Recovery Rebate Credit, which was a separate pandemic-era benefit with its own (now-closed, in most cases) claiming windows. It’s specifically and only about penalties and interest the IRS charged on filing and payment deadlines that fell within the disaster window — not about the underlying tax liability itself, which you still owed and likely still paid (the only exception being abatement requests for penalties assessed but not yet paid).

It also doesn’t retroactively make a late return acceptable for any purpose beyond the penalty question — if you’re under audit or examination for a return from this period for reasons unrelated to the timing of the filing, a Kwong-based protective claim doesn’t address those separate issues.

And critically, it is not guaranteed money. The appeal is pending, the legal theory could be narrowed or overturned, and even a successful claim is subject to the IRS’s standard review and verification process. Treat this as a real, well-documented opportunity worth pursuing given the low cost of filing — not as a certainty.

How This Compares to Other IRS Penalty Relief You May Already Know About

If you’ve previously dealt with the IRS on penalty issues, you may be familiar with two other relief mechanisms, and it’s worth understanding how they differ from the Kwong-based protective claim process.

First-time penalty abatement (FTA) is a long-standing IRS administrative policy that allows taxpayers with a clean compliance history for the prior three years to request a one-time waiver of certain penalties — typically failure-to-file and failure-to-pay penalties — simply by asking, without needing to demonstrate reasonable cause or cite any particular legal theory. If you’ve never used first-time abatement and you have a single penalty from the disaster window, it’s worth checking whether FTA alone might resolve your situation more quickly than the Kwong claim process, since FTA requests are typically handled faster and don’t depend on the outcome of a pending appeal. The two mechanisms aren’t mutually exclusive, but if FTA fully resolves your specific penalty, you may not need to pursue a separate Kwong claim for that same charge.

Reasonable cause abatement is a separate, fact-specific request where you explain to the IRS why a penalty shouldn’t apply because of circumstances beyond your control — illness, natural disaster, reliance on incorrect professional advice, and similar situations. Many taxpayers who were affected by COVID-19 specifically (illness, business closure, direct pandemic disruption) may have already had some success with reasonable cause requests tied to their individual circumstances, which is different from the Kwong theory’s blanket, automatic postponement argument that doesn’t require you to prove your individual circumstances were affected at all — only that your deadline fell within the disaster window.

The Kwong-based protective claim is broader and less burden-intensive than either of these alternatives because it doesn’t require demonstrating individual hardship or relying on a one-time administrative courtesy — it rests on the legal argument that the deadline itself was automatically postponed by statute, which if upheld would apply uniformly to everyone whose deadline fell in the window, regardless of their personal circumstances during the pandemic.

A Note on Tax Year 2025 and Beyond

None of this changes your obligations for the current tax year or any future filing. The Kwong ruling and the protective claim process address penalties and interest already assessed during the historical 2020–2023 disaster window. It is not a general holiday from filing deadlines, penalty rules, or compliance obligations going forward. If you owe taxes for 2025 or have FBAR or other information return obligations coming due, those remain in full effect regardless of how the COVID-era refund situation plays out.

A Timeline of How We Got Here

Understanding the sequence of events helps explain why this opportunity exists now, in 2026, for penalties charged years earlier, and why the deadline lands where it does.

January 20, 2020: The date the federal COVID-19 disaster period is now understood to have effectively begun for purposes of the Section 7508A(d) postponement calculation, per the Kwong court’s interpretation.

2020–2023: Throughout the pandemic, the IRS provided various forms of administrative filing and payment relief — the well-known shifted April deadlines in 2020 and 2021 being the most visible — but continued to assess failure-to-file, failure-to-pay, and estimated tax penalties on returns and payments it considered late outside those specific administrative windows.

May 11, 2023: FEMA’s COVID-19 disaster incident period officially ends.

July 10, 2023: Adding the statutorily required 60-day tail to the May 11 end date produces this date — which the Kwong court later identified as the actual end of the automatic deadline postponement period under Section 7508A(d).

2022: The IRS issued Notice 2022-36, a narrower administrative penalty relief program that refunded approximately $1.2 billion to about 1.6 million taxpayers — a meaningfully smaller population and scope than what the Kwong theory potentially covers.

2024: The U.S. Tax Court decides Abdo v. Commissioner, ruling the IRS lacked authority to assess certain penalties during the disaster period — the first judicial crack in the IRS’s position, though limited in scope and binding effect.

November 25, 2025: The U.S. Court of Federal Claims decides Kwong v. United States, interpreting Section 7508A(d) to mean the full 3.5-year window from January 20, 2020 through July 10, 2023 triggered automatic deadline postponement — a far broader and more consequential ruling than Abdo.

Late 2025 into early 2026: Tax professionals, CPA firms, and the National Taxpayer Advocate begin publicizing the Kwong decision’s implications and the upcoming filing deadline. The IRS signals its intent to appeal but has not, as of this writing, formally filed that appeal.

April 30, 2026: National Taxpayer Advocate Erin M. Collins publishes guidance acknowledging that, by the Kwong court’s logic, the IRS should not have assessed these penalties — significant because it represents the closest thing to an internal IRS acknowledgment of the theory’s validity, even as IRS leadership separately maintains its position on appeal.

July 10, 2026: The deadline, tolled by the length of the disaster period under the Kwong ruling, by which affected taxpayers must file a protective claim to preserve their right to a refund regardless of how the appeal is ultimately resolved.

After July 10, 2026: The fate of pending protective claims depends on the outcome of the government’s appeal to the U.S. Court of Appeals for the Federal Circuit — a process that could extend well into 2027 or later, with the possibility of further appeal to the Supreme Court after that.

Why This Particular Case Reached So Many Taxpayers

It’s worth pausing on why Kwong became the vehicle for such a broad claiming opportunity when Abdo, decided a year earlier, didn’t generate nearly the same level of attention or claims activity. The difference comes down to scope and clarity. Abdo addressed a specific taxpayer’s specific factual situation and reached a conclusion that was influential but narrowly applied — it didn’t establish, in clear and broadly citable terms, that the postponement applied automatically and uniformly to the entire disaster period for any taxpayer with a deadline inside that window.

Kwong did exactly that. By resolving a timeliness question that required interpreting the full scope of Section 7508A(d)‘s postponement period, the court produced a ruling that practitioners could point to as establishing a blanket rule rather than a fact-specific exception. That’s why CPA firms, tax attorneys, and the National Taxpayer Advocate’s office all began actively publicizing the claiming opportunity within months of the Kwong decision — the ruling gave them a clean, citable legal theory to build claims around for any client with a penalty in the window, rather than requiring a case-by-case factual argument the way Abdo’s narrower holding would have.

This is also why the IRS’s anticipated appeal carries such high stakes. A Federal Circuit ruling upholding Kwong would essentially settle the question for the entire federal court system going forward, cementing the broad claiming theory. A reversal would significantly narrow or eliminate the basis for the claims currently being filed, though it wouldn’t retroactively undo IRS refunds or abatements already processed and paid out in the interim.

Watching for Scams

Any time a legitimate, IRS-acknowledged opportunity like this one circulates widely, opportunistic scammers follow close behind, often faster than legitimate coverage can correct the record. A few patterns worth recognizing specifically in the context of this claiming opportunity:

Be skeptical of any unsolicited text message, email, or phone call claiming to be from the IRS directly about this refund — the IRS does not initiate contact about this kind of claim by phone, text, or email, and it never asks for payment information, gift cards, or wire transfers to “release” a refund you’re owed.

Be cautious of services demanding broad, unrestricted access to your full IRS transcript history and personal information before disclosing any details about fees, process, or what they’ll actually do with that access.

Be wary of any company creating urgency beyond the genuine July 10, 2026 deadline — phrases like “your specific refund expires in 48 hours” or “only X spots remaining” layered on top of the real deadline are manufactured pressure tactics, not features of the actual legal process.

Verify any company’s claims about its founders, credentials, or track record independently rather than taking marketing copy at face value — a legitimate CPA or tax attorney will have a verifiable license number you can check through your state’s bar association or board of accountancy.

Frequently Asked Questions

What is Kwong v. United States? A November 2025 ruling by the U.S. Court of Federal Claims holding that IRC Section 7508A(d) automatically postponed federal tax filing and payment deadlines for the entire COVID-19 disaster declaration period — January 20, 2020 through July 10, 2023. The ruling means penalties and interest the IRS assessed for deadlines falling within that window may have been improperly charged.

What’s the deadline to file a claim? July 10, 2026. The standard statute of limitations for a refund claim is generally three years from when a return was filed or two years from when the tax was paid, whichever is later — for most pandemic-era tax years, that window would already be closed. The Kwong ruling tolls (pauses) that statute of limitations for the length of the disaster period, which pushes the effective deadline out to July 10, 2026 for most affected taxpayers. After that date, the door closes regardless of how the appeal is eventually decided.

Is the IRS automatically sending refunds to people who qualify? No. This is not a class action and there is no automatic processing. The only way to preserve your right to a refund is to file your own claim — Form 843 — by the deadline.

What form do I use? Form 843, “Claim for Refund and Request for Abatement.” Use the current Rev. 12-2024 version, downloaded directly from IRS.gov. It cannot be e-filed and must be mailed.

Do I need to know the exact dollar amount I’m owed before I file? No. A protective claim doesn’t require an exact calculated amount or an immediate refund request — it requires identifying the legal issue (Kwong), the basis of your claim, and the specific tax year(s) involved. You can supplement the claim with exact figures later.

Can I file Form 843 electronically? No. The form must be submitted on paper by mail. Use certified mail with a return receipt so you have proof of timely filing, since that’s your only evidence if the IRS claims it never received your form.

What should I write across the top of the form? “Protective Refund Claim Pursuant to Kwong v. United States” — this is the specific language the National Taxpayer Advocate’s guidance recommends, and it signals to the IRS the legal basis of your claim.

Do I need a separate Form 843 for each year? Generally yes. File a separate form for each tax year and each type of tax involved rather than combining multiple years or unrelated penalty types on one form.

Where do I mail Form 843? To the IRS service center where you’d file a current-year return for the tax type involved. If you’re responding to a specific IRS notice about the penalty, mail it instead to the address shown on that notice.

Do I need a CPA or tax attorney to file this? Not necessarily. For a straightforward individual claim covering one or two tax years, most taxpayers can complete and file Form 843 themselves. Professional help is more likely to be worthwhile for business owners with complex multi-entity penalty histories, taxpayers with international information return penalties, or anyone who simply doesn’t have time before the deadline.

Should I use a paid “refund finder” service that takes a percentage of my refund? It’s worth doing the math first. Percentage-of-recovery services commonly charge 20–25% of whatever you receive, which can amount to more than a flat-fee CPA or attorney would charge for the same single-page filing, particularly for larger refunds. For most straightforward individual situations, filing yourself costs nothing but time.

What penalties and interest are covered? Failure-to-file penalties, failure-to-pay penalties, estimated tax penalties, late-filing penalties on international information returns (Forms 5471, 3520, 8938, and similar), and underpayment interest — all tied to deadlines that fell between January 20, 2020 and July 10, 2023.

Will filing a protective claim trigger an IRS audit? Most tax practitioners believe the risk is low for a straightforward Form 843 filing based on the Kwong theory, though it’s a reasonable question to discuss with a professional if your broader tax history has other complications.

I already received penalty relief under the IRS’s 2022 relief notice. Can I still file a Kwong claim? This is a genuinely unresolved interaction that practitioners are still working through — if you already received abatement under Notice 2022-36 or a first-time penalty abatement request, whether that precludes additional relief under Kwong isn’t fully settled. If this applies to you, it’s worth a conversation with a tax professional given the added complexity.

What if the IRS wins its appeal? If the Federal Circuit overturns Kwong, the legal theory underlying these claims weakens substantially, and pending protective claims would likely be processed less favorably or denied. But taxpayers who filed by the July 10, 2026 deadline would have preserved whatever rights existed, rather than having lost the opportunity by missing the window entirely.

How long does it take to get a refund after filing Form 843? Processing has historically taken three to six months or longer, and that timeline could extend further given the volume of Kwong-related claims expected as the deadline approaches. Separately, the broader legal question won’t be fully resolved until the government’s appeal plays out, which could take a year or more on its own.

The Bottom Line

A federal court ruled that the IRS charged penalties and interest it had no legal authority to charge during a 3.5-year stretch of the pandemic, and the agency is appealing rather than refunding anyone automatically. Tens of millions of taxpayers — disproportionately people who were self-employed, ran small businesses, or lived abroad during those years — may be entitled to money back, but only if they file a specific, properly worded claim before July 10, 2026. The form itself is one page. The protective claim language is a fixed phrase. The process is genuinely accessible to most individual taxpayers without paying a service a quarter of their refund to do it for them. Pull your transcripts, identify the penalties that fall in the window, write the claim, mail it certified, and keep your receipt. Whatever the appeal eventually decides, July 10, 2026 is the date that actually controls whether you stay in the running at all.