But You Must Claim It Before July 10, 2026
If you paid any kind of penalty or interest to the IRS between 2020 and mid-2023, the federal government might owe you that money back—potentially with interest.
Tens of millions of taxpayers, including individuals, small business owners, large corporations, estates, and trusts, are eligible for these refunds. However, the IRS will not automatically mail you a check. You must proactively file a claim to lock in your rights, and a critical deadline is rapidly approaching: July 10, 2026.
Here is everything you need to know about a massive legal shift, how it affects your tax liability, and the exact steps required to protect your refund.
The Legal Catalyst: Kwong v. United States Explained
In November 2025, the U.S. Court of Federal Claims handed down a landmark decision in Kwong v. United States. This case revolves around how the tax code treats deadlines during a federally declared disaster.
Under Section 7508A of the Internal Revenue Code, when a federal disaster is declared, tax filing and payment deadlines are automatically postponed for the duration of the disaster window plus an additional 60 days.
- The COVID-19 Disaster Window: The pandemic was officially declared a federal disaster on January 20, 2020, and the declaration was not lifted until May 11, 2023.
- The 60-Day Extension: Adding 60 days to the end of the disaster declaration establishes a final postponed deadline of July 10, 2023.
What This Means for Your Tax Deadlines
According to the court’s logic in Kwong, every statutory filing and payment deadline that fell within that three-and-a-half-year window was legally postponed. Consequently:
- Returns filed during this period were not late.
- Payments made during this period were not late.
- The late-filing, late-payment, and failure-to-deposit penalties (along with accrued underpayment interest) assessed by the IRS during this window should never have been charged in the first place.
The IRS strongly disagrees with this ruling and is expected to appeal, meaning a final resolution in the court system could take several years. However, taxpayers cannot afford to wait for the appellate courts to rule.
Why You Must Act Before July 10, 2026
Taxpayers generally have a limited window to claim refunds: three years from the date the return was filed or two years from the date the tax was paid, whichever is later.
Because the Kwong ruling establishes that tax deadlines within the disaster window were legally postponed to July 10, 2023, the three-year statute of limitations for filing a refund claim officially expires on July 10, 2026.
If you do not submit your claim by this date, your window shuts permanently. Even if an appellate court ultimately rules in favor of taxpayers, or if the IRS later admits it shouldn’t have assessed the charges, you will be barred from receiving a refund if your paperwork wasn’t filed by the July 10, 2026 deadline.
Which IRS Penalties Are Eligible?
This applies to anyone who filed an income tax return, employment tax return, estate/gift tax return, or late international information return during the disaster window and was hit with enforcement charges. Eligible assessments include:
- Failure-to-file penalties (Late filing)
- Failure-to-pay penalties (Late payment)
- Failure-to-deposit penalties (Common for businesses managing payroll taxes)
- Accrued interest on underpayments or late payments
To illustrate the scale, the IRS assessed over 14 million tax penalties on individuals and another 18 million failure-to-file penalties in the 2023 fiscal year alone. If you managed a side hustle, owned rental property, or owed estimated taxes during the pandemic, you likely incurred an eligible penalty—even if you don’t recall it today.
How to Check If You Are Owed Money
Do not rely on memory alone. You can verify your penalty history directly with the IRS in about five minutes:
- Log into your account on the official IRS website.
- Request and download your IRS Tax Transcript for the tax years 2020, 2021, 2022, and 2023.
- Review the line items for any transactions showing penalties or interest with transaction dates falling inside the disaster relief window.
If you see these entries, you have a valid foundation to file a claim.
Step-by-Step: How to File a Protective Refund Claim
Because the Kwong case is still actively moving through legal appeals, you must file what is known as a Protective Refund Claim. This process informs the IRS in writing that you are preserving your right to a refund pending the final judicial outcome. You do not need to calculate the exact dollar amount down to the penny today; you simply need to establish your claim over those tax years.
To execute this, use IRS Form 843 (Claim for Refund and Request for Abatement).
[DOWNLOAD IRS FORM 843 FROM THE OFFICIAL IRS WEBSITE]
Critical Rules for Filing Form 843
- Determine Your Request Type: If you have already paid the penalty and want your money back, you are filing a Refund Claim. If the IRS assessed the penalty but you have not paid it yet, you are filing an Abatement Request to strip the charges away.
- Write the Correct Language: To make the protective claim legally binding and prevent the IRS from rejecting it as “too vague,” write explicitly across the top of the form: “Protective refund claim pursuant to Kwong v. United States.” You must clearly identify the specific tax years, issues, and penalty types involved.
- File Separate Forms Per Year: Do not bundle multiple tax years onto one sheet. If you were penalized in 2020, 2021, and 2022, you must fill out and mail three separate Form 843 submissions.
- Mail on Paper via Certified Mail: Form 843 cannot be submitted electronically. Print the forms, sign them, and send them via Certified Mail with a Return Receipt Requested. This receipt is your absolute legal proof that the IRS received your claim before the July 10, 2026 deadline in case it is lost during processing.
Avoid Refund Scams and Promoters
As this deadline approaches, expect an influx of social media promoters and tax resolution companies guaranteeing massive refunds. Many will demand steep upfront fees or a substantial percentage of your recovered funds.
Avoid these operations. There are no guarantees in an active court case. Filing a protective claim is a precautionary strategy to safeguard your rights if the final ruling favors taxpayers. Furthermore, Form 843 is straightforward enough that you can download, fill out, and mail it yourself without paying a third party to do it on your behalf.
Take control of your tax records, pull your transcripts, and mail your protective claims well before the July 10, 2026 cutoff to ensure your money isn’t left behind.