Millions of Americans may be entitled to a refund from the Internal Revenue Service (IRS) for penalties and interest charged during the COVID pandemic. This opportunity arises from a court ruling that challenged the agency’s enforcement of tax deadlines during the health emergency, but there is one key condition: those who wish to preserve this potential benefit must file a claim by July 10, 2026.
Although the federal government has appealed the ruling and a final decision has not yet been reached, experts agree that waiting for the outcome of the litigation could mean losing the chance to claim a refund forever.
Why might the IRS issue refunds related to the pandemic?
The basis for these potential refunds lies in the case of Kwong v. United States, decided by a federal court in late 2025.
The ruling concluded that the deadlines for filing tax returns and making tax payments should have remained suspended during the period of the federal disaster declared due to the COVID pandemic. If this ruling ultimately prevails, many of the penalties and interest charges the IRS imposed for late payments or returns during that period could be deemed invalid.
This does not mean that the IRS has approved a new relief program or that it will send out automatic payments. It is simply an opportunity for taxpayers to preserve their right to request a potential refund if the court ruling becomes final.
Who might be eligible for a refund?
The following may qualify:
- Individuals.
- Businesses.
- Estates and trusts.
Generally speaking, those who paid penalties or interest related to the following may benefit:
- Late filing of tax returns.
- Late payment of taxes.
- Penalties for estimated payments.
- Interest accrued on those penalties.
Even those who still have outstanding penalties may request a reduction or waiver by filing a petition for remission, although experts recommend not delaying the start of the process.
The amount of any potential refund will depend on each individual case. Some individuals may recover relatively small amounts, while businesses or taxpayers with multiple penalties could receive significantly larger sums if the court ruling stands.
What is the deadline for filing a claim?
The critical date is July 10, 2026. This deadline is based on the statutory limits for filing tax refund claims. Once this deadline has passed, those who have not filed a protective claim will lose the opportunity to claim those funds, even if the courts ultimately rule in favor of the taxpayers.
The National Taxpayer Advocate, Erin Collins, has also recommended reviewing tax records and filing protective claims whenever there is a possibility of eligibility.
How do I file a claim with the IRS?
In most cases, the claim must be filed using Form 843, which is used to request refunds or the waiver of certain penalties and interest.
Experts recommend first reviewing the IRS tax account history to determine whether penalties for late filing or late payment were assessed during the affected years.
When completing the form, taxpayers must indicate that this is a protective claim related to the case of Kwong v. United States and the COVID-19 disaster period.
Although some taxpayers may be able to complete the process on their own, more complex cases may require the assistance of a tax professional to accurately determine which penalties and interest are eligible.
It is also recommended to send the documentation by certified mail before July 10, to have proof that the request was received within the legal deadline.
Is the refund guaranteed?
No. The Treasury Department and the IRS continue to challenge the court’s decision, so the litigation could drag on for months or even years.
Filing a claim before the deadline does not guarantee that the taxpayer will receive money. However, it does preserve the taxpayer’s right to claim a potential refund if the courts definitively uphold the interpretation established in the case of Kwong v. United States.
Those who do not file a claim by July 10 will lose that opportunity, regardless of the case’s final outcome. In the meantime, those who still have outstanding tax debts must continue to meet their tax obligations, as penalties and interest continue to accrue under current regulations until a final resolution is reached.
