COVID Tax Refunds: A little-known IRS refund opportunity tied to the pandemic era is about to close its window, and unlike the stimulus checks most Americans remember, this one requires action — it will not arrive automatically. The COVID tax refund opportunity stems from a November 2025 federal court ruling in Kwong v. United States, which found that IRS filing and payment deadlines were automatically suspended for the entire length of the COVID-19 disaster declaration a period running from January 20, 2020, through July 10, 2023. Because that ruling effectively resets the clock on the standard refund statute of limitations, the National Taxpayer Advocate says tens of millions of taxpayers who paid certain penalties or interest during that window may be entitled to money back, but only if they file the right paperwork before July 10, 2026.
The mechanics matter here: this is not a new stimulus program, a fresh relief bill, or an automatic deposit. It’s a protective refund claim a legal filing that preserves your right to money the IRS may eventually owe you once ongoing litigation is resolved, even though the government is appealing the underlying decision. Eligible taxpayers generally need to file IRS Form 843 by the deadline, and missing it can permanently close the door on a refund, regardless of how the appeal ultimately turns out. Here’s a complete breakdown of who may qualify, what’s driving the deadline, and exactly how to file.
COVID Tax Refund Deadline: Key Dates and Facts
| Date | Event | Why It Matters |
|---|---|---|
| January 20, 2020 | Start of the COVID-19 federal disaster declaration period | Marks the beginning of the window during which penalties/interest may be refundable |
| Fall 2020 | IRS denies taxpayer Terry Kwong’s request for a penalty refund | Sets off the legal dispute that would later become Kwong v. United States |
| February 2023 | Kwong files suit in the U.S. Court of Federal Claims | More than two years after IRS’s denial, within the allowed window to sue |
| May 11, 2023 | Formal end of the COVID-19 federal disaster declaration | Starting point for calculating the disaster period’s 60-day extension |
| July 10, 2023 | Disaster period plus 60-day extension ends | Court treats this as the “postponed” due date for affected filings and payments |
| November 25, 2025 | Court of Federal Claims rules in Kwong v. United States, 179 Fed. Cl. 382 | Establishes that IRC §7508A(d) automatically suspended deadlines for the full disaster period |
| December 26, 2025 | P.L. 119-64 enacted | Provides an additional statutory basis requiring the IRS to treat disaster postponements as deadline extensions |
| April–May 2026 | National Taxpayer Advocate issues public guidance urging taxpayers to review transcripts | Signals growing awareness of the refund opportunity ahead of the deadline |
| July 1, 2026 | IRS launches a limited online filing option for Form 843 via IRS Online Account | First time eligible individual taxpayers can file electronically, though only for fully paid penalties/interest |
| July 10, 2026 | Final deadline for most refund and protective claims tied to the disaster period | Missing this date generally forecloses the refund permanently |
What Is the Kwong v. United States Case, and Why Does It Matter?
The refund opportunity traces back to a taxpayer named Terry Kwong, who paid IRS penalties for several older tax years and asked for a refund, which the IRS denied in the fall of 2020. Kwong eventually sued, and in November 2025, the U.S. Court of Federal Claims sided with him, ruling that Internal Revenue Code Section 7508A(d) the provision governing disaster-related deadline postponements — automatically suspended federal tax filing and payment deadlines for the entire length of the COVID-19 disaster declaration, not just a portion of it. That declaration, plus a required 60-day extension, effectively pushed many original deadlines out to July 10, 2023.
Because the standard refund statute of limitations runs either three years from when a return was filed or two years from when tax was paid whichever is later treating July 10, 2023 as the operative due date for disaster-period filings pushes the refund deadline for many affected taxpayers out to July 10, 2026. In practical terms: if the IRS charged you a failure-to-file penalty, failure-to-pay penalty, estimated tax penalty, or related interest on a return or payment that was due sometime between January 20, 2020, and July 10, 2023, this ruling may mean that penalty was improperly assessed — and refundable.
Who May Be Eligible for a COVID Tax Refund?
Eligibility isn’t universal, and it depends heavily on individual filing and payment history. Generally, you may have a claim if:
- You paid a failure-to-file penalty (IRC §6651(a)(1)) on a return due within the disaster window
- You paid a failure-to-pay penalty (IRC §6651(a)(2)) during that same period
- You paid an estimated tax penalty tied to a due date inside the window
- You paid interest that accrued on any of the above during the disaster period, even if the original tax liability arose before January 20, 2020
Notably, some tax professionals point out that even taxpayers who were already delinquent before the pandemic began may be able to argue that interest and penalties should not have continued accruing during the disaster period itself — though the IRS disputes this interpretation, and it remains one of the more contested points of the case.
A few categories fall outside Kwong’s scope. FBAR penalties (FinCEN Form 114) rest on a separate legal authority (Title 31) and aren’t covered by this ruling. Certain international information return penalties — tied to Form 5471, Form 3520, and Form 8938 — may or may not qualify, depending on more complex analysis, and typically warrant professional review before filing. State-level penalties and interest are also unaffected; Kwong is a federal ruling only, and state tax authorities operate under entirely separate statutes.
How to File: Form 843 and the Protective Claim Process
For most affected taxpayers, the filing vehicle is IRS Form 843, Claim for Refund and Request for Abatement. A few practical details matter:
- Use the current version. The IRS redesigned Form 843 in December 2024, so make sure you’re working from Form 843 (Rev. 12-2024) — older copies found online may have different line numbers and checkboxes.
- File separately for each tax year and penalty type. Multiple years or unrelated issues generally shouldn’t be combined on a single form.
- Label the claim clearly. For paper filings, write “Kwong vs. United States” or “Protective Refund Claim Pursuant to Kwong Case” across the top of the form so the IRS routes it correctly.
- Add a protective-claim statement. On Line 8, include a sentence identifying the filing as a protective claim under Treas. Reg. Section 301.6402-2(b)(1), citing both the Kwong decision and IRC §7508A(d) as the legal basis.
- Attach supporting documentation. IRS account transcripts showing the penalties and interest charged, along with any related IRS notices, strengthen the claim and help establish the exact amount at issue.
- Choose refund vs. abatement correctly. If you already paid the penalty or interest, you’re requesting a refund. If the IRS assessed it but you haven’t paid yet, you’re requesting an abatement.
- Consider the new electronic option. As of July 1, 2026, individual taxpayers with an existing IRS Online Account can file a Kwong-related claim electronically through IRS.gov’s Mobile-friendly forms page — but only for fully paid interest and penalties. Business taxpayers and anyone who prefers not to e-file must still mail the paper version.
- Mail early and by certified mail if filing on paper. Given the hard deadline, certified mail postmarked on or before July 10, 2026, helps establish a verifiable record of timely filing.
Why File a “Protective” Claim If the Case Is Still on Appeal?
The Department of Justice is expected to appeal the Kwong decision, meaning it is not yet final, and the IRS has not begun issuing refunds under this ruling. This creates what tax professionals describe as a timing trap: the refund claim deadline could arrive before the appeal is ultimately resolved. A protective claim solves this by locking in your filing date now, while the legal question continues to be litigated. The IRS may hold these protective claims in suspense — neither approving nor denying them outright — until the appellate process concludes, at which point the claim can be finalized based on the court’s ultimate decision. Filing costs little beyond time and paperwork; not filing forecloses the possibility of a refund entirely, regardless of how the appeal turns out.
The COVID tax refund opportunity created by Kwong v. United States could apply to tens of millions of taxpayers who paid federal penalties or interest between January 20, 2020, and July 10, 2023 — but it requires action, not patience. With the July 10, 2026 deadline now just days away, anyone who believes they may have been charged penalties during the pandemic-era disaster window should pull their IRS account transcripts, determine whether a Form 843 protective claim applies to their situation, and file before the window closes. Given the complexity of the underlying legal reasoning and the documentation required, consulting a qualified tax professional particularly for anyone with penalties or interest totaling several thousand dollars or more — is worth the cost given what’s potentially at stake.
