Covid Refunds - Kwong v United States

June 8, 2026

A recent federal court decision, Kwong v. United States, may create an opportunity for some taxpayers to seek refunds or other relief for certain IRS penalties and interest connected to the COVID-19 period. Although the law is still developing, July 10, 2026, may be an important deadline either for preserving those claims or requesting a refund or abatement. We are monitoring this area and evaluating whether the ruling may be relevant based on individual circumstances.

Why this matters

During the COVID-19 declared emergency, special disaster-relief rules postponed certain tax deadlines. In Kwong, taxpayers who paid certain penalties and interest – or still have unpaid assessed amounts from that period – may want to review whether relief is available. This issue may apply to a wide range of taxpayers, including individuals, businesses and trusts/estates.

Items worth reviewing

· Failure to file and pay penalties

· Certain estimated tax penalties and interest

Important reminders

· There may be a limited‑time opportunity to recover penalties and interest paid during the pandemic.

· The IRS will not issue refunds automatically

· Action is required by July 10, 2026, but in some situations the deadline could be earlier.

· The United States has appealed the decision but the appeal will not be decided until after the July 10, 2026 deadline for submitting claims.

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If the United States wins the appeal, no refunds under this ruling would be issued even if the claim was made. Given the uncertainty and our fees for our work, most small claims are probably not worth the cost. We have evaluated our client's tax returns for years 2019-2023 and we have already reached out to those clients that have signifcant penalties.

If you feel that you might have substantial penalties during those years, we recommend logging into your IRS account at www.irs.gov and print a Record of Account and Account Transcripts for those years. If there are significant penalties and we have not reached out to you, please contact our office.

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