Millions of taxpayers in the United States could be entitled to recover money from the Internal Revenue Service (IRS) for fines and interest charged during the COVID-19 pandemic. However, there is an important detail: the refund is not automatic. Those who believe they may be eligible must file a claim by July 10, 2026 to preserve their right to receive the money.
The opportunity arises from the court case Kwong v. United States, in which a federal court determined that the IRS may have improperly applied penalties during the national emergency period declared by the pandemic.
Who might be entitled to a refund?
According to the National Taxpayer Recommend, those who:
- They filed late tax returns between January 20, 2020 and July 10, 2023.
- They paid fines for late filing.
- They paid interest related to those sanctions.
- They received penalties for late payments during that period.
- They maintain outstanding fines corresponding to those years.
The recommendation is to review the tax history to identify if there were charges of this type.
Why is there this possible refund?
The court that analyzed the Kwong case concluded that the COVID-19 health emergency qualified as a national disaster under certain provisions of the tax code.
Under that interpretation, the deadlines to comply with certain tax obligations should have been automatically extended, which would call into question the legality of some penalties and interest charged by the IRS during that period.
However, the litigation is not yet fully resolved, and the government has expressed its disagreement with the ruling.
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Why you should file a claim as soon as possible
So why file the claim now? Because time is ticking. The National Taxpayer Ombudsman recommends file a “protective claim” before July 10, 2026 to avoid definitively losing the right to request reimbursement if the judicial decision ends up favoring taxpayers.
In other words, filing now doesn’t guarantee you’ll receive money, but it does protect your ability to claim it in the future.
How to request a possible refund from the IRS
Taxpayers must:
- Review your tax transcripts to identify penalties and interest for the affected period.
- Complete Form 843, called Claim for Refund and Seek records from for Abatement.
- Mail documentation to the IRS by July 10, 2026.
Currently, this procedure cannot be carried out electronically.
What you should take into account
Before starting the process, experts recommend consulting with a tax professional, especially if the returns are complex or involve companies.
Additionally, it is important to remember that not all taxpayers qualify, and that the final outcome will depend on how the litigation is resolved in court.
For now, the message from the National Taxpayer Defender’s Office is clear: if you believe you paid penalties related to tax obligations during the pandemic, do not wait until the last minute to find out if you can claim that money.
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