The U.S. government is formally appealing a federal court decision that could allow millions of Americans to pursue refunds related to COVID-19 tax issues. Tax attorneys are advising taxpayers to continue filing their claims despite the uncertainty surrounding the appeal. Glen Frost from Frost Law emphasized that although the government’s appeal signifies a complex legal battle ahead, it should not deter individuals from filing claims to safeguard their potential refunds or abatements.
The appeal stems from the case of Kwong v. United States, where a federal court established that the COVID-19 public health emergency period, spanning from January 20, 2020, to May 11, 2023, qualified for tax deadline postponements under a specific disaster provision. This ruling shifted the tax filing deadlines for 2019, 2020, 2021, and 2022 to July 10, 2023.
Tax attorneys argue that during this extended period, the IRS could not impose penalties or interest, making all taxpayers who faced such charges eligible for refunds. Given that the standard statute of limitations for filing refund claims is either three years from the date of the return or two years from when taxes were paid—whichever is later—the window for claiming refunds closes on July 10, 2026.
For taxpayers wishing to pursue these refunds, the advice is clear: claims must be filed by the deadline to preserve their right to recover potential funds if the court ruling stands. Taxpayers need to scrutinize their tax records to determine if they were assessed any penalties or interest during the disaster period. This can be accomplished through tax professionals or by reviewing IRS tax transcripts, which detail yearly tax information including penalties and interest assessments.
Taxpayers can access these transcripts online via the IRS Individual Online Account or request them by mail or through an automated phone service. It typically takes about five to ten days for the transcript to arrive.
If eligible, taxpayers must submit a claim to protect their rights. Claims can be filed using IRS Form 843, specifically requesting a refund and abatement associated with the ruling in Kwong v. United States. This submission should note that it’s a “protective claim,” serving to alert the IRS to hold the claim until the legal complexities are resolved.
Taxpayers do not have to complete separate forms for each individual tax year but must clearly identify the relevant tax years on their claims.
The implications of this situation extend across a wide spectrum of the population, affecting individuals, small businesses, corporations, estates, and trusts. Related tax obligations include income, employment, estate, gift, and excise taxes, and even international information return penalties could be impacted.
Notably, taxpayers may be entitled to recover penalties for late filings or payments and interest that accrued improperly. For many, particularly those facing financial hardships, these potential refunds could be significant. However, the pressing reminder remains: taxpayers must act by July 10, 2026, to secure their claims. As underscored by experts, even liabilities incurred before the designated disaster period may allow for refunds on penalties and interest that arose during that time.
