The IRS may owe refunds to millions after court rulings tied to COVID-era filing deadlines, but you must act by July 10, 2026 to preserve any claim. This article explains who might qualify, what the court found, why refunds are not automatic, and the exact steps taxpayers should take now to pursue a refund or abatement.
A recent federal decision has opened the door to recovering penalties and interest the IRS charged for late filings and payments during the COVID-19 disaster window. The National Taxpayer Advocate, Erin Collins, described the situation as a “major refund opportunity” (1), and the window to file claims is tight. If you were hit with failure-to-file or failure-to-pay penalties or related interest between Jan. 20, 2020 and July 10, 2023, you could be owed money. The government may appeal, so this remains a developing matter.
Under the usual rules the IRS levies a failure-to-file penalty of 5% of unpaid tax per month and a failure-to-pay penalty of 0.5% per month, together capped at 25% (2)(3). Interest also accrues on unpaid balances and on many penalties, making late tax bills grow faster than most people expect. The court rulings at issue found that the official disaster period effectively postponed filing deadlines, so charging those penalties and their interest for that stretch may have been improper. Those findings create a path for refunds or abatements for affected taxpayers.
One of the key cases cited is Kwong v. United States (4), and press coverage has covered how lower courts are interpreting the federal disaster period in relation to tax deadlines (5). Taken together, these decisions say assessments tied to the pandemic period may not stand. That does not automatically erase every charge; rather, it gives taxpayers a legal basis to request that penalties or interest assessed during the covered dates be removed or repaid.
Importantly, refunds are not automatic and the Treasury will not simply send checks without claims being filed. The deadline to submit a claim is July 10, 2026, so taxpayers with a potential case need to move now. While the government could still appeal the rulings, filing a timely claim preserves your rights and starts the administrative process needed to recover money that might be owed.
Start by pulling your IRS tax transcripts from your online account to confirm whether penalties or interest were assessed between Jan. 20, 2020 and July 10, 2023. The transcript is the clearest way to see specific penalty codes, amounts, and dates, and it will tell you whether you have a viable claim. If you find charges in that window, document everything and prepare to file the proper form to make your claim official.
The correct administrative route is Form 843, Claim for Refund and Request for Abatement, which taxpayers must submit to request either a refund of penalties and interest already paid or an abatement if the charges remain unpaid. Form 843 cannot be filed electronically, so you must mail a physical copy to the IRS. Sending the claim by certified mail or another trackable method is strongly advised so you have proof of timely filing.
Because Form 843 and accompanying arguments can be technical, many taxpayers will want professional help. A competent tax advisor or enrolled agent can review transcripts, prepare the form, and craft the legal and factual argument that links your assessed charges to the pandemic window at issue. Working with an expert is not required, but it can reduce errors and speed the process, especially given the looming deadline.
If your claim succeeds, you may receive a refund of penalties and interest or an abatement that removes outstanding charges. If the IRS denies the claim, administrative appeal options and judicial review may remain available, but those steps are more complex and time-sensitive. Keep careful records of everything you send and receive from the IRS, including certified mail receipts and any correspondence tied to your Form 843 submission.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
