Kwong vs. U.S.: July 10 Deadline for COVID-Era Refund Claims

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The United States Court of Claims recently held in a case titled Kwong vs. United States that certain taxpayers may file claims for refund until July 10, 2026 for interest and penalties paid to the IRS related to filing deadlines during the COVID declared national disaster. The government has filed an appeal. If the appeals court reverses the lower court’s decision, refund claims would be disallowed. However, it is important for impacted taxpayers to file a protective claim for refund by July 10 to preserve their rights while the litigation continues.

What did the court determine?

The court determined that the COVID disaster declaration extended the due date for filing returns, paying tax and filing claims for refund. For taxpayers who paid interest or penalties for failure to file, failure to pay tax, or failure to pay estimated tax with respect to tax due during the period between January 20, 2020 and July 10, 2023, the deadline to file a refund claim is July 10, 2026. It rejected arguments by the IRS that the disaster relief extension of time did not apply to the COVID period and that the maximum disaster relief extension of time is 60 days.

What is the current status?

The IRS has filed an appeal in the case. There is no specified timeline for the appeal to be resolved, and there will likely be further procedural maneuvers or appeals after that. The IRS has not issued a formal “acquiescence” in this case, meaning that they will continue to pursue their arguments in other cases against other taxpayers.

What taxpayers are impacted?

This case at the moment impacts taxpayers who paid interest or penalties for taxes due between January 20, 2020 and July 10, 2023 who have not already claimed a refund. The holding clarifies that the COVID disaster declaration postponed the time for filing and paying tax until July 10, 2023. This means that taxpayers who paid penalties for failure to file and/or pay tax and interest on unpaid tax for any part of that period can claim a refund of that amount.

What should impacted taxpayers do?

Taxpayers who paid interest or penalties for taxes due in the covered period should contact their tax preparers immediately to consider filing a protective claim for refund. Such a claim is made by filing IRS form 843 and writing on top “Protective Claim for Refund under Kwong case”. A refund claim will be timely only if it is filed on or before July 10, 2026.