A November 2025 court decision may have unlocked refund rights for tens of millions of Americans who paid IRS penalties during the pandemic — but collecting that money requires filing paperwork by July 10, and almost nobody knows the clock is running.
The person who went public with the warning was Erin Collins, the National Taxpayer Advocate, who posted about it on April 30. Her concern wasn’t just the legal technicality. It was that the taxpayers with accountants and tax attorneys would quietly collect while everyone else missed the window entirely.
“My overriding goal is to get the word out to as many taxpayers as possible and to avoid disparate results between the ‘well advised‘ and the ‘unaware,'” Collins wrote.
Get IRS penalties back: What the court actually said
The case that triggered everything is Kwong v. United States, decided by the U.S. Court of Federal Claims in November 2025. A related Tax Court ruling from 2024 — Abdo v. Commissioner — pointed in the same direction.
A provision in the federal tax code, IRC § 7508A(d), says that when a national disaster is declared, tax filing and payment deadlines are automatically pushed back for the full length of that declaration, plus 60 days on top.
COVID-19 was declared a federal disaster on January 20, 2020. That declaration stayed in effect until May 11, 2023. Tack on the 60-day tail and the postponement period ends July 10, 2023.
Who IRS refunds covers
The Kwong court read the statute exactly as written: nothing filed or paid during that entire 3.5-year stretch was legally late before July 10, 2023. So the failure-to-file and failure-to-pay penalties the IRS charged people during those years? Shouldn’t have happened.
The interest on top of those penalties? Also shouldn’t have happened. The IRS had been reading the law differently the whole time. The Justice Department is expected to appeal.
The affected group is wider than most people would assume. Individuals hit with penalties for late returns, late payments, or missed estimated tax installments during the COVID years fall within the scope. So does anyone who got charged interest that started accruing before it legally should have, or who is owed overpayment interest for that same period.
The reach doesn’t stop at individual filers
Small businesses, corporations, estates, and trusts are all in the mix — across income taxes, payroll taxes, estate and gift taxes, and excise taxes. There’s also a specific category worth flagging: taxpayers who filed international information returns late. Those can generate large penalties even when zero tax is actually owed.
The numbers the IRS was working with in that period give a sense of the scale. In fiscal year 2022 alone, the agency issued more than 12 million estimated-tax penalties and more than 16 million failure-to-pay penalties. Combined dollar value: over $12 billion.
For a single individual with one failure-to-file penalty, the refund might land somewhere between a few hundred and a few thousand dollars. For a business owner with payroll tax complications, a late partnership filing, or international reporting issues, the figure can climb into the tens or hundreds of thousands.
Step-by-step process to claim the refunds
Step one: find out if you’re even affected. Go to IRS.gov and pull your account transcript. It shows every penalty and interest charge on your account with the date each one was assessed. Anything dated between January 20, 2020, and July 10, 2023, is potentially in play.
Nothing here is automatic. The IRS doesn’t send checks because a court ruled in someone’s favor — taxpayers have to ask. The standard window for requesting a refund is three years from the original filing date or two years from the date the tax was paid, whichever comes later. That math puts most people at July 10, 2026.
The form is Form 843 — Claim for Refund and Request for Abatement. A few things to know before filling it out: this isn’t a general refund form, it’s not for amending a return, and it won’t work for recouping an income tax overpayment. It’s a targeted instrument. Filing the wrong form doesn’t just slow things down — it can get the claim rejected outright.
Fill in the affected tax years, identify the type of penalty or interest involved, and include the dollar amount if it’s known. If the exact figure isn’t available, that won’t kill the claim.
Then mail it. Certified mail only — Form 843 has no electronic submission option. The certified mail receipt is proof the claim was filed on time if the IRS ever disputes receipt.
The protective claim
There’s a second option for anyone who doesn’t have exact penalty figures or simply wants to lock in their place in line while the Kwong appeal works through the courts: a protective claim.
A protective claim filed on Form 843 doesn’t need a dollar amount. It needs the affected tax years, a description of what the claim is based on, and a reference to the Kwong case. Collins’s specific recommendation: write “Protective Refund Claim Pursuant to Kwong Case” across the top of the form.