An explanation of Kwong v. United States, Section 7508A(d), and the refund opportunity created by the November 2025 decision — written for non-lawyers.
When the COVID-19 pandemic was declared a national emergency in January 2020, the federal government took a number of steps to provide relief to taxpayers. Among the most visible was the IRS's decision to extend certain tax filing deadlines — in 2020, the individual income tax deadline was moved from April 15 to July 15. In 2021, it was moved from April 15 to May 17.
Most taxpayers followed these publicly announced extensions and assumed they were protected. But there is a separate provision in the federal tax code — IRC Section 7508A — that governs how tax deadlines must be handled during federally declared disasters. This provision had largely been overlooked in the context of the pandemic.
Under this provision, when the President declares a federal disaster, certain federal tax deadlines must be postponed for the duration of the disaster period plus an additional 60 days. This is a mandatory postponement — not just a discretionary extension.
In November 2025, the U.S. Court of Federal Claims issued a decision in Kwong v. United States that applied Section 7508A(d) to the COVID-19 pandemic. The court determined that the COVID-19 public health emergency — which ran from January 20, 2020 through May 11, 2023 — qualifies as a federally declared disaster under this provision.
Under the court's interpretation, tax deadlines for filings and payments tied to the 2019, 2020, 2021, and 2022 tax years were effectively extended to July 10, 2023 (May 11, 2023 + 60 days).
The practical consequence: if tax deadlines were legally postponed until July 10, 2023, then the IRS had no legal authority to assess penalties and interest before that date — for filings and payments that were technically not yet overdue. Taxpayers who were charged those penalties and paid them may have a claim for a refund.
This ruling does not mean every American who paid taxes during COVID is owed a refund. The opportunity applies specifically to penalties and interest that were (a) charged during the COVID disaster window, and (b) actually paid by the taxpayer. Charges that were previously waived or abated do not create additional recovery rights under this ruling.
Tax practitioners estimate that millions of individual taxpayers and businesses may have paid penalties or interest during the COVID disaster period. For individuals, these amounts might range from a few hundred dollars to several thousand, depending on the size of the tax balance and how long it remained unpaid.
For businesses — particularly those that experienced severe cash flow disruption during the pandemic — the potential amounts are often significantly larger. A business that carried a large tax balance for a year or more during the pandemic may have accumulated substantial failure-to-pay penalties and associated interest.
The IRS itself has not released estimates of the total amount at issue. Independent analysis by tax attorneys suggests the aggregate could be substantial, but individual amounts vary widely by taxpayer.
The standard vehicle for asserting a refund claim in this context is IRS Form 843 — Claim for Refund and Request for Abatement. Tax practitioners are recommending that eligible taxpayers file what is known as a protective claim — a Form 843 that essentially tells the IRS you are asserting your rights while the legal questions are still being resolved through appeals.
A protective claim does not require you to have a final favorable court ruling in hand. It simply preserves your statute of limitations. If the courts ultimately rule in taxpayers' favor, you will be in line for a refund. If the IRS ultimately wins on appeal, the claim will not result in a payment — but you will have lost nothing by filing.
When filing a protective claim under this ruling, practitioners recommend citing Kwong v. United States and Section 7508A(d) on the form. A separate Form 843 is generally required for each tax year at issue. The form is filed with the IRS service center where you filed your original return.
Refund claims with the IRS are subject to a statute of limitations. Generally, a taxpayer has three years from the date a return was filed, or two years from when a tax was paid, whichever is later, to file a refund claim.
Based on the court's interpretation of the extended disaster deadline (July 10, 2023), many tax attorneys are treating July 10, 2026 as the effective deadline for protective claims tied to the COVID disaster period. This is the date that is three years after the court's effective tax deadline.
The IRS is expected to appeal the Kwong ruling. That appeal process could take months or years to resolve. Critically, the IRS appeal does not extend the deadline for taxpayers to file claims. If you wait for the appeal to be decided and the IRS wins, you will not have a refund claim. But if you wait and the taxpayer-side ultimately prevails, your statute of limitations will likely have already closed — permanently forfeiting your right to a refund.
This asymmetry is why nearly every tax attorney commenting on this situation recommends filing a protective claim before July 10, 2026 regardless of appeal uncertainty.
Many taxpayers are aware of the IRS's earlier, broader COVID penalty relief program, through which the IRS proactively waived certain penalties for 2020 and 2021 tax returns and issued automatic refunds to eligible taxpayers who had already paid. That program was an administrative decision by the IRS and did not require individual taxpayers to take action.
This opportunity is different in three important ways:
1. It requires affirmative action. The IRS is not reviewing accounts or issuing refunds proactively under the Kwong ruling. Taxpayers must file Form 843 to assert their claim.
2. It covers a potentially broader range of charges. The earlier waiver program focused on specific penalty types for specific years. The Kwong ruling, if upheld, could cover a wider range of penalties and interest across more tax years.
3. There is a firm deadline. The earlier waiver program had no strict filing deadline for most taxpayers. Under Kwong, the July 10, 2026 statute of limitations is a hard cutoff.
The starting point is reviewing your IRS account transcripts to determine whether you were charged any penalties or interest during the COVID disaster period (January 20, 2020 through July 10, 2023) and whether those charges were actually paid. Transcripts can be accessed through the IRS online account portal or requested by mail using IRS Form 4506-T.
If your transcripts show penalties or interest paid during this period, the next step is consulting with a qualified advisor to assess your specific situation and prepare the appropriate Form 843 claims before the July 2026 deadline.
WonderTrust assists in pulling and analyzing IRS transcripts, quantifying potential refund exposure, and preparing protective claim filings. Start with a free assessment to determine whether this opportunity may apply to you.