The clock is ticking for tens of millions of Americans who may be owed money by the IRS. A landmark federal court ruling known as Kwong v. United States has opened the door for taxpayers to claim refunds or abatements on penalties and interest assessed during the COVID-19 pandemic — but only if they act before a rapidly approaching deadline. The National Taxpayer Advocate (NTA) estimates that a staggering number of taxpayers — individuals, small businesses, large corporations, estates, and trusts — could qualify for significant refunds, with the deadline to file a claim falling on July 10, 2026.
What the Kwong Ruling Means for Your Taxes
In November 2025, the U.S. Court of Federal Claims issued a decision in Kwong v. United States that sent shockwaves through the tax world. The court ruled that because the COVID-19 federal disaster declaration — which ran from January 20, 2020, through July 11, 2023 — automatically extended federal tax deadlines under existing law, the IRS should not have assessed penalties for late filing, late payment, or failure to make estimated tax payments during that 3.5-year period. Nor should interest have been charged on those amounts.
"By the court's logic, the IRS should not have assessed penalties for late filing or payment during that 3.5-year period, nor charged interest on those amounts," the NTA explained in a recent blog post. The ruling effectively means that any taxpayer who was penalized by the IRS during the COVID-era disaster period for missing a deadline may now be entitled to get that money back.
Who Qualifies for a COVID-Era IRS Refund?
According to the Taxpayer Advocate Service, the potential refund or abatement applies to anyone assessed any of the following during the COVID-19 federal disaster period:
- Penalties for failure to timely file tax returns
- Penalties for failure to pay taxes
- Penalties for failure to make estimated tax payments
- Interest that began accruing earlier than it should have
- Overpayment interest for the 2020–2023 disaster period
This covers virtually every type of federal tax — income, employment, estate, gift, and excise taxes. The NTA emphasizes that this issue is "widespread and not limited to a small subset of taxpayers." Tens of millions of Americans across all income levels could be affected.
Timeline: How the COVID Refund Opportunity Developed
Understanding the timeline is critical for taxpayers hoping to claim their refund:
- January 20, 2020 — COVID-19 federal disaster declaration begins, automatically suspending certain tax deadlines under federal law
- January 20, 2020 – July 10, 2023 — The COVID federal disaster period. The IRS continued assessing penalties and interest on late filings and payments during this time
- July 10, 2023 — End of the COVID disaster period plus 60 additional days (as provided by law for tax purposes)
- November 2025 — U.S. Court of Federal Rules issues Kwong v. United States decision, ruling that the IRS should not have assessed penalties during the disaster period
- April 30, 2026 — National Taxpayer Advocate publishes blog alerting tens of millions of taxpayers to potential refunds
- May 2026 — News outlets nationwide begin covering the story, urging taxpayers to act before the deadline
- July 10, 2026 — Deadline to file Form 843 with the IRS to claim refund or request abatement
Why This Matters for Your Financial Planning
The financial implications of this ruling are enormous. Taxpayers who were penalized for late filings or payments during the pandemic could be looking at refunds ranging from a few hundred to potentially thousands of dollars. For small business owners who faced failure-to-pay penalties or self-employed individuals hit with estimated tax penalties, the refunds could be even more substantial.
"Tens of millions of taxpayers may be eligible for significant tax refunds," the NTA warned, urging action. Erin M. Collins, the National Taxpayer Advocate, has made this a top priority, noting that most taxpayers will lose their right to claim a refund if they do not file a protective claim by July 10, 2026. Importantly, this is not just about refunds for money already paid — taxpayers who were told they owe penalties can also file for an abatement, which reduces or eliminates the amount they have to pay.
The Kwong decision has also prompted legal discussions about whether the IRS might appeal the ruling. Experts from firms like Aprio and Frost PLLC note that if the decision stands, the July 10 deadline applies. However, taxpayers should not wait for a potential appeal — filing a protective claim now preserves their rights regardless of how the legal landscape shifts.
Current Status: Where Things Stand Now
As of May 2026, news outlets across the spectrum — from USA Today and Yahoo Finance to ABC News and local affiliates like Local12 and ABC7 — are amplifying the NTA's warning. The IRS itself has not issued mass notices to affected taxpayers, meaning the burden falls entirely on individuals and businesses to determine their eligibility and file a claim.
The National Taxpayer Advocate has been publishing detailed guidance on how to file, and tax professionals across the country are scrambling to assist clients ahead of the July 10 cutoff. The IRS's own Taxpayer Advocate Service website has become a hub for information, with multiple blog posts explaining the process step-by-step.
How to File Your Claim Before the Deadline
Claiming your refund requires filing IRS Form 843, Claim for Refund and Request for Abatement. Here are the key steps, according to the NTA:
- Download Form 843 from the IRS website (irs.gov/Form843)
- Write "Protective Refund Claim Pursuant to Kwong Case" — or something similar — across the top of the form
- Fill in as much detail as possible, including the tax years in question and the specific penalties you were assessed
- File by paper mail — Form 843 cannot be filed electronically
- Send via certified mail so you have proof of when you submitted the claim
- Submit before July 10, 2026 to preserve your rights
The NTA recommends filing what's called a "protective claim" even if you don't have all the details. The key is to get something on file before the deadline. You can always amend or supplement the claim later.
What Happens Next: The Road Ahead
With the deadline fast approaching, financial advisors recommend that anyone who filed taxes late between 2020 and 2023, or who was assessed penalties during that period, consult with a tax professional immediately. The IRS may appeal the Kwong decision, but filing a protective claim now ensures your place in line regardless of what happens in court.
"The taxpayer must generally file their claim within three years from the date they filed their tax return or two years from the date they paid their tax," the NTA blog post explains. For most affected taxpayers, the July 10, 2026, deadline represents the last opportunity to claim refunds they are rightfully owed.
Key Takeaways: What You Need to Do Now
- The July 10, 2026 deadline is firm — act now or risk losing potential refunds
- The Kwong v. United States ruling applies to penalties for late filing, late payment, and estimated tax penalties during COVID-19 disaster period
- Tens of millions of Americans — individuals and businesses — may be eligible
- File Form 843 by paper, via certified mail, with "Protective Refund Claim Pursuant to Kwong Case" written at the top
- Even if you don't have all details, file a protective claim before July 10 to secure your rights
