March 17, 2026 — Washington D.C. / Tax Alert
For most Americans, the COVID-19 pandemic feels like a closed chapter. But if the IRS charged you penalties or interest between January 2020 and mid-2023 — and you paid those charges — there is a very real possibility that you are owed a refund. A new IRS-related court ruling may allow some taxpayers to claim refunds for penalties or interest paid during the COVID-19 disaster period. The opportunity is time-sensitive. Tax attorney Jon Wasser of Fox Rothschild warned: "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." Here is everything you need to know.
💰 What Is This Refund? The Short Version
This is not a new stimulus check. It is not related to the Recovery Rebate Credit or the expired April 15, 2025 deadline for 2021 refunds. This issue is about possible refunds of IRS penalties or interest based on a court ruling about disaster-related deadline suspension.
In plain English: the federal government may have charged you penalties and interest during COVID that it legally wasn't allowed to charge. A court has now ruled that those charges were potentially invalid — and you may be able to get that money back.
⚖️ The Court Case: Kwong v. United States
A federal court ruled that the COVID-19 public health emergency — which ran from January 20, 2020, through May 11, 2023 — qualified as a federally declared disaster under tax code Section 7508A(d). That provision requires tax deadlines to be pushed back for the duration of the disaster plus 60 days.
Do the math, and the effective tax deadline for the 2019 through 2022 filing years shifts to July 10, 2023. The implication, according to tax attorneys, is significant: if your tax deadlines were legally extended, then the IRS likely had no right to charge penalties and interest during that window.
The case is called Kwong v. United States — decided by the U.S. Court of Federal Claims — and it is the legal foundation for every refund claim tied to this issue. The IRS is expected to appeal the court's decision, but the appeal process does not extend the deadline for individuals to file their claims.
🙋 Who Qualifies? Check If This Applies to You
Anyone — including individuals and businesses — who was charged fees by the IRS between January 20, 2020, and July 10, 2023, may request a review of those charges.
Specifically, you may qualify if you are an individual or business assessed or who paid failure-to-file or failure-to-pay penalties for dates during 2020 through mid-2023, or a taxpayer charged significant underpayment interest tied to a payment the IRS treated as due during that same period.
You are most likely to qualify if any of these apply:
- 📋 You filed a tax return late during 2020–2023 and were charged a failure-to-file penalty
- 💸 You paid taxes late and were charged a failure-to-pay penalty
- 📈 You were charged underpayment interest on taxes the IRS said were due during the pandemic window
- 🏢 You are a business that accumulated penalties during COVID-related cash flow disruptions — tax experts say the largest claims could come from businesses that struggled with cash-flow disruptions during lockdowns and accumulated failure-to-pay penalties
- 📄 You have an installment agreement where penalties or interest accrued during this period
You are less likely to qualify if:
- ❌ You filed and paid on time during the pandemic with no penalties
- ❌ Your penalties were already waived under the IRS's 2023 Notice 2022-36 penalty relief program
- ❌ You never received any balance-due notices from the IRS for 2019–2022 tax years
🔍 Step 1: Check Your IRS Records Right Now
Tax professionals say the first step is reviewing your IRS tax records. Taxpayers can examine their tax account transcripts, which show penalties, interest, and payment history for each year.
How to get your IRS transcripts:
- Go to IRS.gov
- Click "Get Your Tax Record"
- Sign in or create an IRS account (free)
- Request your "Account Transcript" for tax years 2019, 2020, 2021, and 2022
- Look for line items showing: "Failure to Pay Penalty," "Failure to File Penalty," or "Interest Charged" — dated between January 20, 2020 and July 10, 2023
If you see penalties or interest assessed during the pandemic window, that's your signal to act.
📝 Step 2: File a Protective Claim Using IRS Form 843
You or your tax professional can file using IRS Form 843, the standard form for refund claims and abatement requests. The key is to specify that it's a protective claim based on the Kwong v. United States decision and Section 7508A(d) of the tax code.
Filing a protective claim essentially puts the IRS on notice while the litigation plays out. You're not demanding an immediate refund — you're preserving your right to one if the courts ultimately rule in taxpayers' favor.
What to write on Form 843:
- 📌 Cite: Kwong v. United States
- 📌 Cite: Internal Revenue Code Section 7508A(d)
- 📌 State that you are filing a "protective claim" for refund of penalties/interest assessed during the COVID-19 disaster period
- 📌 Include the specific dollar amounts from your IRS transcript
- 📌 Include the relevant tax year(s)
Tax attorney Wasser advises: "You just need to put the IRS on notice now." The IRS will likely not immediately process the claim — but the filing preserves your legal rights.
⏰ The Deadline: July 10, 2026 — Do Not Miss It
This is the single most important fact in this entire story:
The statute of limitations generally allows three years from the time a return was filed or two years from when a tax was paid. Based on the court's determination of the postponed deadline, the final date to preserve a claim is July 10, 2026.
This issue should not be confused with the expired April 15, 2025 deadline for claiming ordinary 2021 income tax refunds or missed Recovery Rebate Credit amounts tied to pandemic stimulus. That earlier deadline has already passed. The current story is different.
⚠️ KEY WARNING: The IRS is expected to appeal the court's decision, but the appeal process does not extend the deadline for individuals to file their claims. Even if the IRS wins its appeal, you lose nothing by filing a protective claim now. But if the IRS loses its appeal and you haven't filed — you permanently lose your chance at a refund.
💼 Real-World Example: Western Digital's $21 Million Claim
Western Digital filed suit against the government seeking a refund on nearly $21 million in interest it was charged during the pandemic period — part of a broader $53.6 million tax settlement.
That is an extreme corporate example. But it illustrates the principle at stake: if even the largest corporations are pursuing claims, individual taxpayers with smaller but still significant penalties have the same legal right to do so.
📊 How Much Could You Get Back?
The amount depends entirely on what the IRS charged you during the pandemic period. Here is a quick guide to the penalty amounts that may be refundable:
- 📋 Failure-to-File Penalty: 5% of unpaid taxes per month (up to 25% maximum)
- 💸 Failure-to-Pay Penalty: 0.5% of unpaid taxes per month (up to 25% maximum)
- 📈 Underpayment Interest: Federal funds rate + 3 percentage points, accruing daily
For a taxpayer who owed $10,000 in taxes during 2020 and paid 18 months late, for example, the combined penalties and interest could easily total $1,500–$2,500 — all potentially refundable under a successful claim.
Nearly 5 million tax returns qualified for the temporary pandemic penalty relief program, which totaled an estimated $1 billion. The Kwong ruling potentially opens up an even broader universe of claims.
🚨 What This Is NOT — Important Warnings
- ❌ NOT an automatic payment — you must file a claim
- ❌ NOT a new stimulus check
- ❌ NOT related to the Recovery Rebate Credit
- ❌ NOT guaranteed — the IRS is appealing and the courts have not issued a final ruling
- ❌ NOT a scam — but beware of scammers claiming to process these refunds for a fee
- ⚠️ IMPORTANT: Do not pay anyone to "file" your refund claim. IRS Form 843 is free. A tax attorney or CPA can help, but no one should charge you a percentage of your potential refund upfront
📅 Full Action Plan: What to Do Before July 10, 2026
- ✅ Check your IRS transcripts at IRS.gov for tax years 2019–2022 — look for penalties and interest dated Jan 20, 2020 – July 10, 2023
- ✅ Calculate the amounts you actually paid in penalties and interest during that window
- ✅ Consult a tax professional if your amounts are significant (over $500)
- ✅ Download IRS Form 843 from IRS.gov
- ✅ File your protective claim citing Kwong v. United States and Section 7508A(d)
- ✅ File before July 10, 2026 — not in June, not in late June. Now.
- ✅ Keep a copy of everything you submit
🔑 Key Facts at a Glance
- 📜 Court case: Kwong v. United States — U.S. Court of Federal Claims
- 📋 Tax code provision: Section 7508A(d) — disaster-related deadline suspension
- 📅 Pandemic window: January 20, 2020 — July 10, 2023
- ⏰ Claim deadline: July 10, 2026 — permanent cutoff
- 📄 Form to file: IRS Form 843 (Claim for Refund and Request for Abatement)
- 👥 Eligible: Individuals AND businesses who paid penalties/interest during the pandemic window
- 💰 Potential total claims: Billions of dollars nationwide
- 🏢 Corporate example: Western Digital seeking $21 million refund
- ⚖️ IRS stance: Plans to appeal — but filing deadline does NOT wait for appeal
- 🤝 Expert advice: File a protective claim NOW, even if the law is still developing
⚠️ DISCLAIMER: This article is for informational purposes only and does not constitute legal or tax advice. Consult a qualified tax attorney or CPA before filing any claim with the IRS. The law in this area is evolving and the outcome is not guaranteed.
📡 Sources: IBTimes UK/IBTimes.com (March 16–17, 2026), Centered.tech (March 14), CNBC (January 29, 2026), IndexBox/IRS.gov (March 12), Elliott Davis Tax Alert (February 2026), Market Realist (March 14), Fox Rothschild (Jon Wasser interview), JobAdvisor.link (March 14) — all citing Kwong v. United States, U.S. Court of Federal Claims.
🔄 Last updated: March 17, 2026.
🔖 Tags: IRS Pandemic Refund, IRS Refund 2026, COVID Tax Refund, Kwong v United States, Form 843, July 10 Deadline, IRS Penalties, COVID Tax Relief, Tax Refund 2026, US Economy 2026
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