IRS COVID Tax Refund Deadline Could Mean Money Back

The IRS has made a landmark decision regarding penalties and interest on taxes paid during the COVID-19 pandemic. According to a court ruling in the case of Kwong v. United States, taxpayers who were wrongly charged penalties and interest during the COVID-19 federal disaster period may be eligible for a refund. The disaster period officially began on January 20, 2020, and ended on May 11, 2023.

Terry Kwong, the plaintiff in the case, sued for a refund of penalties he paid for tax years 2007, 2010, 2011, 2015, and 2016. He argued that he was entitled to an extension under COVID-19 relief legislation and an existing tax rule that suspends or postpones deadlines for taxpayers affected by a federally declared disaster. The court ruled in his favor, stating that the IRS should have extended the deadlines from 2020 to July 10, 2023.

Individuals and businesses who paid penalties or interest for filing late, failing to pay taxes on time, failing to make estimated tax payments, or overpaying interest on taxes owed between 2020 and 2023 may be eligible for a refund. To determine if you qualify, review your tax files from those years and check your federal income tax transcripts in your online IRS account.

If you are eligible for a refund, you must file a special Form 843 with the IRS service center by July 10, 2026. This deadline is based on the new tax deadline established in the Kwong case. There are two types of refund claims you can file: a formal refund claim and a protective refund claim. A formal refund claim is filed when you know the amount you are owed, while a protective refund claim is filed when the issue is still being litigated.

It is important to file the claim before the deadline to preserve your refund rights. While the IRS may appeal the decision and the process may take years, it is crucial to claim the money owed to you. Remember, a timely claim is more important than a perfect one, as missed deadlines cannot be corrected. Stay informed and take the necessary steps to claim your refund before the deadline.