Court Ruling Could Trigger Millions in IRS Pandemic Refunds

Here’s the twist: you might be owed money by the government for taxes paid during the pandemic. Recent rulings from the United States Court of Federal Claims, most notably in the case of Kwong v. United States, suggest that tens of millions of Americans could qualify for refunds on federal tax penalties and interest. The court reinterpreted how deadlines were postponed under the federal disaster declaration, effectively erasing a three-year window where the Internal Revenue Service (IRS) was charging fees it arguably shouldn't have.

If you filed late or paid late between January 2020 and July 2023, you weren’t just unlucky—you may have been penalized illegally. The stakes are high, the timeline is tight, and the process is surprisingly analog in our digital age. Let’s break down what this means for your wallet.

The Legal Loophole That Changed Everything

It all comes down to Section 7508A(d) of the Internal Revenue Code. During the height of the pandemic, Congress passed legislation to give taxpayers breathing room. But there was ambiguity about exactly when that relief ended. Did it end when the disaster declaration expired? Or did it extend further?

In its recent decision, the Court of Federal Claims ruled in favor of taxpayers. Judges determined that filing and payment deadlines were automatically postponed until 60 days after the end of the federally declared COVID-19 disaster. According to analysis by Cohen & Company, this postponement period ran from January 20, 2020, through July 10, 2023.

That extra 60-day buffer is the key. It means any penalty or interest assessed between those dates—covering more than three years of filings—may have been improperly collected. As one expert noted, "The court held that these deadlines were suspended, so charges applied during that suspension are voidable."

Who Qualifies for a Refund?

This isn’t just for individuals who missed their April 15 deadline. The net casts wide. According to reports from TIME magazine and legal analyses, eligibility extends to:

• Individual American taxpayers
• Small businesses and large corporations
• Estates and trusts
• Anyone charged with late fees for foreign information returns (like FBARs or Forms 8938)

Even if you owed taxes from prior years, if the interest or penalty accrued between January 20, 2020, and July 10, 2023, you might be in the running. The logic is simple: if the clock was stopped, the meter shouldn’t have been running.

The Clock Is Ticking: Deadlines You Can’t Miss

Here’s the catch. You can’t just wait for the IRS to send you a check. You have to file a claim, and you have to do it fast. The statute of limitations is strict.

Generally, you must file a refund claim within the later of two dates:

1. Three years from the date you filed your original tax return.
2. Two years from the date you made the payment.

Because the court treats July 11, 2023 as the effective end of the postponement period, most taxpayers will see a hard deadline of July 10, 2026. However, if you made a payment closer to that date, your window extends. For example, if you paid penalties on July 1, 2025, you’d have until July 1, 2027, to file. Missing this mark likely forfeits your rights, regardless of how strong the legal precedent becomes.

How to File Your Protective Claim

The process is less intuitive than e-filing your annual return. In fact, it’s painfully old-school. You cannot file this claim electronically. You must use Form 843, titled "Claim for Refund and Request for Abatement," and submit it on paper.

To start, log into your account on the IRS website using ID.me verification. Download your federal income tax transcripts. Look specifically for penalty or interest charges dated between January 20, 2020, and July 11, 2023. If you see them, you’ve got a potential case.

When filling out Form 843, label it clearly. Experts advise writing something like: "Protective Refund Claim Pursuant to Kwong Case." Specify the exact penalties, interest amounts, tax periods, and dates involved. Because the litigation is ongoing, this is considered a "protective claim"—it preserves your right to recover funds without admitting the final outcome yet.

Crucially, send the form via certified mail. The IRS does not provide automatic confirmation of receipt for these forms. Without proof of mailing and delivery, you risk having the government dispute whether you filed on time. As tax advisor Collins warned, "Certified mail provides legal proof should there be disputes from the government on the location of the form."

What Happens Next?

The legal battle isn’t over. While Kwong v. United States sets a powerful precedent, it hasn’t reached a final, binding resolution for all parties across every circuit. The Taxpayer Advocate Service has joined the chorus, urging millions to act before the July 10, 2026, deadline to preserve their options.

If the courts ultimately uphold this interpretation, we’re looking at a massive wave of refunds flowing back to households and businesses. If not, you’ll have wasted some postage and time—but you’ll have protected yourself against losing money you never should have paid. Given the potential payout, the small hassle of mailing a paper form seems worth it.