CSG Law Alert: Act Now! Deadline to File a Tax Refund/Abatement Claim for COVID-19 Era Penalties & Interest Expires in July
You could be entitled to COVID-19 pandemic relief for penalties and interest that were assessed during the COVID-19 pandemic, but the filing deadline is fast approaching.
Tens of millions of taxpayers may be entitled to a tax refund or abatement for penalties and interest assessed during the COVID-19 pandemic. This includes penalties for failure to file returns on time, failure to pay taxes, or failure to make estimated tax payments. It also includes interest that never should have accrued or interest that began accruing earlier than it should have, and interest overpayments for the 2020-2023 disaster period. Those eligible for a potential refund include individuals, businesses, trusts, estates and nonprofits who paid any such penalties and interest.
In the recently decided Federal Court decision, Kwong v. United States,1 a taxpayer successfully argued that Section 7508A(d) of the Internal Revenue Code (the “Code”), the tax code provision governing the postponements of disaster-related filing and payment deadlines, provided an automatic postponement of filing and payment deadlines during the COVID-19 pandemic.
Under Kwong, the Court clarified that the mandatory postponement period is based on the length of the disaster, plus 60 days.2 The COVID-19 pandemic ended on May 11, 2023 by federal disaster declaration. Therefore, under Kwong, the end of the disaster period plus 60 days is July 10, 2023, making July 10, 2026 the deadline to file a protective claim for a tax refund or abatement.
The Kwong decision has clarified filing deadlines for disaster relief, including the COVID-19 pandemic time period. Impacted taxpayers must act quickly; otherwise, they risk losing this tax relief, as relief is not granted automatically. Affected taxpayers must submit a protective claim by July 10, 2026 to preserve their rights.
How to file your protective claim:
Unfortunately, taxpayers cannot file a claim electronically. Instead, they must file a paper Form 843, Claim for Refund and Request for Abatement.
Your claim should include the following:
- A written statement that your claim is based on Kwong and that you are preserving your right to a refund. You should also cite P.L. 119-64 (Disaster Related Extension of Deadlines Act) and Section 7508A(d) of the Code, explaining that the COVID-19 disaster period applies to your claim for relief.
- Identification of the tax year, penalty type and amount paid.
- Supporting documentation, which may include IRS notices, account transcripts and any canceled checks or proof of payment.
- Submit your claim by certified mail before July 10, 2026.
Failure to file a protective claim by the July 10, 2026 deadline results in a forfeiture of any refund rights that you may be owed.
Final Concerns:
Kwong only applies at the federal level. It does not extend to state penalties or interest.
Many tax professionals anticipate the Department of Justice will appeal Kwong. They have also expressed concern that the inability to e-file Form 843, coupled with the approaching deadline, will cause a delay in processing claims.
From a policy perspective, there is also concern that not many taxpayers are aware of their refund rights and the impending deadline.
While filing a protective claim does not guarantee payment, it preserves your right to a refund based on an unresolved legal issue while an appeal is pending.
Next Steps:
You should review your tax filings for the relevant years, request tax transcripts and speak with a trusted tax advisor(s) to determine whether you are entitled to a refund. If you discover that you have a right to a refund, file your protective claim as soon as possible.
For more information, contact the author of this article or the CSG Law Tax Group.
1 179 Fed. Cl. 382 (Nov. 2025).
2 Id. at 8-9; 12-13.