According to recent court rulings, taxpayers who owed penalties and interest to the IRS during a three-year window after the start of the COVID-19 pandemic may be eligible for a refund or abatement. While this could affect millions of taxpayers, most are still unaware. These taxpayers must file a paper form by July 10 or risk losing out on tax relief.
What Happened?
When the global pandemic began in early 2020, our lives and the global economy as a whole were seriously disrupted. To alleviate pressure ahead of the tax filing deadline that year, the IRS pushed back all filing and payment deadlines to July 15, 2020.
What was not apparent until recent court decisions is that most filing and payment deadlines were actually delayed for more than three years after the pandemic began. This is because, shortly before the pandemic began, Section 7508A(d) of the tax code was enacted to pause tax filing and payment deadlines during declared national emergencies and for a short period of time after the emergency declaration ended. The scale of the COVID-19 pandemic and length of time during which the U.S. would operate under an emergency declaration could not have been predicted at that time.
The long deadline delay was recently uncovered by two court cases: Abdo v. Commissioner and Kwong v. United States. In the April 2024 Abdo ruling, the Tax Court determined that Section 7508A(d) automatically extended the deadline to file a Tax Court petition during the pandemic. The court also invalidated Treasury regulations that subsequently attempted to narrow the scope of the statute’s deadline relief. In November 2025, the U.S. Court of Federal Claims ruled in Kwong that the law puts a mandatory pause on most deadlines from January 20, 2020 to July 10, 2023.
Taxpayers are generally allowed to file a claim for a refund or abatement of penalties and interest for three years after they filed their taxes or two years after they paid, whichever is later. The courts’ rulings are widely interpreted as allowing taxpayers to file a claim for a refund or abatement of penalties and interest incurred during the period tax deadlines were paused, so long as they do so by July 10, 2026, which is three years after the end of the pause.
The Kwong case is not yet final as the IRS is expected to appeal the ruling. Unfortunately, taxpayers may not get clear answers prior to July 10, 2026, but should still file for relief in the meantime.
Who Is Affected?
Estimates suggest that millions of taxpayers may be eligible for a refund or abatement of practically all penalties, including those for failure to file, late payment, or underpayment. The ruling also applies to interest on those penalties. Generally, anyone who paid or owed any penalties and interest during this time should consider themselves potentially eligible for relief.
The National Taxpayer Advocate notes that tens of millions of taxpayers were assessed penalties and interest during this time. The IRS previously estimated that the limited penalty relief it provided for late forms filed by September 30, 2022, would affect nearly 1.6 million taxpayers. Since the Kwong case covers a much larger period as well as a broader set of penalties and interest, it is very likely that this affects several million taxpayers.
How Can Taxpayers Get Relief?
Taxpayers will face an uphill battle resolving this due to lack of awareness about the issue and a process that makes claims unnecessarily difficult. At this time, the IRS is neither embarking on a public awareness campaign nor granting blanket relief to taxpayers who owed or paid penalties and interest during this time.
Those who think they may be eligible for tax relief must file a claim on Form 843. Despite the fact that most tax returns are filed electronically, this form must be filed on paper. Taxpayers are encouraged to send it using certified mail due to the IRS’s history of paper record mismanagement.
If you owed or paid penalties or interest during the period from January 20, 2020, to July 10, 2023, it is worth filing a form for relief. Filing a form is the only way to potentially get relief should the court ruling hold.
Taxpayers should follow these steps to secure their claim for tax relief:
1. Confirm your eligibility. Check your tax records to see if you incurred a penalty or interest for taxes with a deadline between January 20, 2020, and July 10, 2023. Go to the following website to check your tax transcripts if you do not have your tax information readily available: https://www.irs.gov/individuals/get-transcript
2. Fill out Form 843. If you are unsure of the exact amount potentially eligible for refund or abatement, the National Taxpayer Advocate recommends writing "Protective Refund Claim Pursuant to Kwong Case" across the top of the form. If you can calculate the exact amount, you can file a formal claim rather than a protective claim, but you must reference Kwong v. United States on the form. Fill out as much information as you can, but the form does not need to be complete. Taxpayers must file separate forms for each tax year. Taxpayers who incurred penalties and interest on both income tax and payroll tax must file separate forms for each tax type. The form can be found here: https://www.irs.gov/pub/irs-pdf/f843.pdf
3. Mail the form before July 10, 2026. Print the form and mail it to the IRS. Using certified mail is recommended. Go to the following website to see where you should mail your form depending on your state, most taxpayers should send to the address listed for Form 1040 unless you know your penalty or interest is related to another form: https://www.irs.gov/filing/where-to-file-paper-tax-returns-with-or-without-a-payment
4. Wait for the courts and IRS to review. The Kwong case is expected to be appealed and processing delays at the IRS could keep taxpayers waiting longer if the decision holds.
Taxpayers are facing an uncertain legal environment, a cumbersome process, and a narrow window of time to act. If the Kwong case holds, it would be wise for the IRS to provide blanket relief given the lack of broader public awareness about this issue leading up to the deadline to file a claim. Unfortunately, taxpayers rarely get deserved relief that easily. For now, the best path forward is to file a paper Form 843 before July 10, 2026.