The case didn’t make headlines when it landed. Kwong v. United States, decided by the U.S. Court of Federal Claims in November 2025, moved through the legal world quietly for months before tax attorneys started flagging what it actually meant.
Now, with a critical deadline taking shape on the calendar, the ruling is getting a second look — and the numbers attached to it are not small.
At its core, the dispute was about a single statutory question: did Section 7508A(d) of the Internal Revenue Code give the IRS discretion over how much pandemic relief to extend, or did Congress remove that discretion entirely when it amended the law in 2019?
The IRS Must Refund Millions of Americans Big Money
The court read the text and concluded the agency never had a choice. The language, the ruling says, is mandatory. When a federally declared disaster is active, tax deadlines don’t bend at the agency’s convenience — they suspend automatically, for the full length of the emergency plus 60 days.
That reading, applied to the COVID-19 disaster period, stretches from January 20, 2020, all the way to July 10, 2023. Not July 2020. Not the end of 2021. July 2023.
What the Agency Did Instead — and Why That’s Now a Problem
What the IRS actually did during those years was something different. Early in the pandemic, the agency moved the April 15, 2020, filing and payment deadline to July 15, 2020. That was the main accommodation. Beyond that, notices went out extending specific deadlines for specific situations, but penalties and interest kept accruing in many cases throughout the broader stretch of the emergency.
The government’s argument, defended in court, was that it retained the authority to decide how much relief was appropriate — and that what it had already provided was enough.
The Court of Federal Claims disagreed. Flatly.
Because the statute made postponement obligatory, not optional, the court found that the IRS had been calculating failure-to-file and failure-to-pay penalties — along with underpayment interest — from due dates that had never legally arrived.
Any charge computed against an original deadline that fell inside the January 20, 2020–July 10, 2023 window was, under this reading, built on a date that the law had already moved. That makes those charges potentially recoverable. It’s a narrow legal distinction. The downstream consequence is not.
Three Groups of Taxpayers Who May Have a Claim
The population of potentially affected filers is wider than most early coverage suggested. Individuals are the obvious category, but the ruling’s logic extends to businesses and nonprofit organizations that carried tax obligations during the same window. Tax analysts have mapped out three overlapping groups.
- First: taxpayers who were directly assessed penalties during the disaster period — the failure-to-file and failure-to-pay charges the court says should never have accrued.
- Second: those who paid interest on tax liabilities tied to deadlines that fell inside the window, where the IRS may have started the interest clock too early.
- Third, and arguably the most consequential: taxpayers whose refund claims or refund lawsuits were previously denied or treated as time-barred — because if the limitations period for those claims itself fell within the COVID window, Kwong extends those deadlines too.
That last group could include cases that both the IRS and taxpayers had already written off.
The Form, the Transcript, the Deadline
For anyone who believes they may qualify, the starting point is the IRS account transcript — a record of what was assessed and when. Transcripts are available through the IRS online portal or by phone at 800-908-9946. Those documents will show whether penalties or interest charges hit the account during the relevant years.
If they did, the vehicle for recovery is IRS Form 843, the standard form for claiming refunds of penalties and interest. Attorneys and accountants handling these claims have recommended attaching a written statement that specifically references IRC §7508A(d) and the Kwong decision, along with the relevant transcript pages and any IRS notices received at the time.
The deadline math works like this: under standard rules, taxpayers have three years from the date a return was filed, or two years from the date a payment was made — whichever comes later — to request a refund. Since the court placed the end of the extended pandemic deadline at July 10, 2023, the three-year mark from that date is July 10, 2026. For a significant share of affected claims, that’s the hard cutoff.