Refunds Available for COVID-Era IRS Penalties and Interest: See if You Are Eligible and Learn How and When To Apply
Tens of millions of American taxpayers, including individuals, estates, trusts, and businesses, may now be eligible for significant refunds or abatement of penalties and interest they paid to the IRS during the COVID-19 pandemic. That is because of a recent court decision interpreting a tax code provision governing disaster-related postponements of filing and payment deadlines. Eligible taxpayers must act quickly, however. Anyone who paid penalties and interest for failure to file or pay between Jan. 20, 2020, and July 11, 2023, can submit a Form 843 to the IRS by July 10, 2026, to preserve their opportunity for a refund.
What Is Being Refunded and Why?
The COVID-19 federal disaster period lasted from Jan. 20, 2020, to July 10, 2023. At the time the disaster was declared, §7508A(d) of the Internal Revenue Code provided for the automatic postponement of filing and payment deadlines during the period a federal disaster declaration is in effect, plus 60 days. Nevertheless, many taxpayers still paid and/or were told by the IRS that they owed late fees, interest, or penalties for failing to make estimated payments during that time.
In November 2025, the U.S. Court of Federal Claims ruled in Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025) that “the plain meaning of [§7508A(d)] is that the automatic extension runs from the beginning of the disaster declaration, through the end of the declared disaster period, and until 60 days after the end of the declared disaster period.” Accordingly, tax returns and payments due anytime within that window were not late until after July 10, 2023, and the IRS should not have assessed penalties for late filing or payment nor charged interest on those amounts during that 3.5-year disaster period.
Who Is Eligible for a Refund or Abatement?
You are generally eligible to claim a COVID-era penalty or interest refund if you:
- Were assessed penalties or interest during the COVID-19 disaster period (which includes the statutory 60-day extension).
- Paid those assessed penalties or interest directly to the IRS.
How To Claim a Refund
If you are considering filing for a refund, you should first verify whether the IRS assessed any penalties or interest during the disaster period by reviewing your IRS tax account transcript, which can be obtained online or by mail. Then, you can file a claim using IRS Form 843, Claim for Refund and Request for Abatement, citing the Kwong decision and Section 7508A(d) and identifying the tax year(s) involved.
Not the Final Word
Critically, you must file your claim with the IRS by July 10, 2026. However, there is no guarantee that you, or anyone else for that matter, will receive a refund. The IRS has appealed the decision in Kwong, meaning that a final determination as to whether any refunds are available at all has yet to be made. That said, you should still file by the July 10 deadline, as submitting such a “protective” claim will preserve your rights to a refund while the case is on appeal.
If you have questions or would like assistance regarding a potential refund claim, please contact Robert Kaplow at Maddin Hauser.