The U.S. government is officially appealing an earlier federal court decision that opened the floodgates for millions of Americans to potentially claim COVID-related refunds, but tax attorneys say don’t worry, keep filing.
“Our advice to clients remains the same,” said Glen Frost, managing partner and founder of Frost Law. “The government’s appeal means the Kwong case enters a new and uncertain phase that may take years to resolve. Regardless of this step, taxpayers still face a short window to file a claim to protect potential refunds or abatements.”
Earlier, a federal court ruled in Kwong v. United States that the COVID-19 public health emergency from Jan. 20, 2020, through May 11, 2023, fell under a provision that postpones applicable tax deadlines for a disaster period plus 60 days. That ruling pushed the new tax deadline for 2019, 2020, 2021 and 2022 tax filings to July 10, 2023.
Without taxes due, the IRS likely also had no right to levy penalties and interests during that window, tax lawyers said. So, everyone who was charged penalties or fees qualified for a refund, they said. But since the statute of limitations for refund claims generally runs three years from the time the return was filed or two years from the time the tax was paid, whichever is later, the deadline to claim a refund is July 10, 2026, they said.
Taxpayers must have made a claim by July 10 to preserve their refund if the ruling is affirmed. “Taxpayers who miss the July date will likely miss their final chance to recoup their money,” Frost said.
To determine eligibility, taxpayers need to check their tax records to see if the IRS levied any penalties or interest during the tax filing pause, said Jon Wasser, partner at Fox Rothschild who focuses on tax issues. They can do that by either asking their tax professionals or looking at their IRS tax transcript.
IRS tax account transcripts show each year’s tax information, including filing status, taxable income and adjustments made after the original return was processed. It also shows payments, penalties and interest with dates they were made or assessed.
Tax account transcripts are available online by registering to use the Individual Online Account to view, print, or download, or by mail, according to the IRS. Americans can order one by mail on the IRS website or by calling the automated phone transcript service at 800-908-9946. It should arrive in five to 10 calendar days.
If a taxpayer’s eligible, they must file to preserve their claim. Tax professionals can file claims on behalf of a taxpayer, or a taxpayer may file one using IRS Form 843, claim for refund and request for abatement, using information from the tax transcript, Wasser said.
A taxpayer should specify on the form that it’s a protective claim based on the Kwong v. United States decision regarding Section 7508A(d) and the COVID-19 disaster period, lawyers said.
“You’re basically telling the IRS, ‘here’s a refund claim, put it on hold for now’” until the case has a final determination, Wasser said. If, after all litigation is complete and the IRS must issue refunds, you would have preserved your right to claim yours.
Taxpayers do not have to file a separate form for each tax year, but they do need to identify the specific tax year or years involved, Erin Collins, independent National Taxpayer Advocate, said.
“Impacted taxpayers represent a broad cross-section of the public, including individuals, small businesses, large corporations, estates, and trusts,” Collins said. “The issue reaches taxpayers with obligations related to income, employment, estate, gift, and excise taxes. It may also affect taxpayers who filed late international information returns, which can result in significant penalties even when no tax is due.”
According to Collins, taxpayers may be owed:
“For taxpayers dealing with financial pressures, these amounts can make a real difference,” Collins said. “But most taxpayers must act by July 10, 2026, to request their potential refunds.”
Additionally, “some practitioners believe that even where the underlying liability arose before the disaster period began, you may not have had to pay interest or penalties during that period,” she said.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.