Recently the decision in a tax court case named Kwong v United States said that the IRS should have extended the relief from penalties throughout the entire three-year-plus period of the COVID-19 pandemic, and not just the 60-day period after the onset of the virus. This decision has been appealed by the IRS, so it is not yet in practice.
The federal disaster declaration was in place from January 20, 2020 until May 11, 2023, and extended 60 days to July 10, 2023. If the Kwong v US decision holds, that would mean that taxpayers would be entitled to refunds of certain penalties and interest assessed during this period.
We don’t know how this will all shake out in court, but here’s the catch: there is a statute of limitations on refunds that in this case runs out on July 10, 2026. So if you paid penalties or interest to the IRS during that Jan 2020- May 2023 period, the Taxpayer Advocate Service recommends that you file a “protective claim” before July 10.
What you can do:
· Review your tax filings for Tax Years 2019, 2020, 2021, and 2022 to determine whether you paid penalties or interest. If you can’t tell from your own records, set up an IRS account and check your Account Transcripts.
· If you did pay penalties or interest during the period in question, you should fill out Form 843. Write “Protective Refund Claim Pursuant to Kwong Case” across the top of the form and include a similar statement in Box 8 of the form. Include as much detail as possible. Be sure both spouses sign if you filed jointly during that period.
· Make a copy to keep in your files and mail the completed and signed original form using CERTIFIED MAIL before July 10, 2026. You absolutely need to hold on to the proof that you filed this on time. If you’re an Iowa resident, mail it to:
Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999-0002
All others can find their mailing address here.
What might happen next:
· The IRS might win the case and the law will stay as it is, so no refunds of penalties and interest for this issue will be forthcoming; or
· The IRS might lose the case and eventually start processing refunds for only those who filed protective claims; or
· The IRS might lose the case and begin the process of refunding all penalties and interest payments that qualify regardless of protective claims.
What seems likely is that we will be waiting a long time before this is resolved,
but you only have until July 10 to file that protective claim.