Millions of Americans may have a chance to claim refunds or abatements from the IRS because of a recent court ruling connected to COVID-era tax deadlines.
The important word is may.
This is not an automatic refund program. It is not a simple stimulus check. It is a complicated legal issue involving penalties, interest, disaster-related tax deadline rules, and a deadline that many people could easily miss.
That is exactly why the National Taxpayer Advocate is warning taxpayers to pay attention before July 10, 2026.
What happened?
The issue comes from a court decision called Kwong v. United States. The case interpreted a tax rule that applies when a federally declared disaster affects filing and payment deadlines.
During the COVID-19 public health emergency, the federal disaster period ran from January 20, 2020, through May 11, 2023. Under the court’s interpretation, tax deadlines affected by that disaster period may have been postponed until July 10, 2023, because the law added 60 days after the end of the disaster period.
If that interpretation holds, then some IRS penalties and interest charged during that period may have been assessed too early, or may not have been valid at all.
That is the core of the refund opportunity.
What kind of money could be involved?
According to the National Taxpayer Advocate, affected taxpayers may be able to seek refunds or abatements for several categories, including:
- penalties for failing to file tax returns on time;
- penalties for failing to pay taxes on time;
- penalties for failing to make estimated tax payments;
- interest that may have started accruing earlier than it should have;
- possible overpayment interest connected to the 2020-2023 disaster period.
This does not mean every taxpayer is owed money. It means people who were charged penalties or interest during the affected period may have something worth checking.
Who could be affected?
This is not limited to one narrow group.
The National Taxpayer Advocate says the issue could affect individuals, small businesses, large corporations, estates, trusts, and taxpayers with obligations related to income, employment, estate, gift, and excise taxes.
It may also affect taxpayers who filed certain international information returns late, because those penalties can be significant even when no tax is owed.
The most vulnerable group may be ordinary taxpayers who do not have professional tax representation. People with accountants and tax attorneys are more likely to hear about the issue. People without that support may never learn that they needed to act.
Why July 10, 2026 matters
For most taxpayers, July 10, 2026 is the key deadline to file a claim.
The reason is that refund claims are usually limited by time. If a taxpayer waits until the courts finally settle the issue, it may be too late to file. That is why the National Taxpayer Advocate says many taxpayers should consider filing a protective claim before the deadline.
A protective claim is basically a way to tell the IRS: I may have a refund claim depending on how this legal issue is finally resolved, and I want to preserve my right to that claim.
What should taxpayers check?
The first practical step is to review IRS tax records, especially account transcripts for the relevant years.
Taxpayers should look for penalties and interest assessed during the COVID disaster period, especially for tax years affected by filing or payment delays.
For many people, the easiest route is to ask a tax professional to review the transcript. Taxpayers can also access IRS transcripts through their IRS online account or request them from the IRS.
How would someone file a claim?
The National Taxpayer Advocate says most taxpayers will likely need to use IRS Form 843, called Claim for Refund and Request for Abatement.
Because the legal issue is still uncertain, the claim may need to be framed as a protective claim based on Kwong v. United States and the COVID-19 disaster period.
There is also a practical problem: Form 843 currently has to be filed on paper. The National Taxpayer Advocate warns that paper filing is slower and harder to track, so taxpayers are generally advised to send claims by certified mail or another method that proves timely mailing.
The IRS disagrees
This part is important.
The IRS and the government do not agree with the broad interpretation used in Kwong. The National Taxpayer Advocate expects the Department of Justice to appeal, and the issue may take years to fully resolve.
So this is not guaranteed money.
The real point is preservation. If taxpayers might be eligible and do not file a claim in time, they may lose the chance to receive a refund even if the courts later rule in favor of taxpayers.
Why this matters beyond taxes
There is a bigger fairness issue here.
Tax law is hard enough in ordinary years. During the COVID period, many people were dealing with job loss, business disruption, illness, family stress, and financial uncertainty. If the law did postpone deadlines more broadly than the IRS recognized, then many penalties may have hit people during a period when the system itself was unusually unstable.
But legal relief does not help much if people never hear about it.
That is the uncomfortable part. The people most likely to benefit from complex tax relief are often the people with advisors. The people most likely to miss it are often the people who need the money most.
This is why the National Taxpayer Advocate is urging the IRS to publicize the issue, create an electronic filing option, consider more time for claims, and look for ways to provide relief systemically if the courts ultimately side with taxpayers.
The bottom line
Americans who paid IRS penalties or interest connected to COVID-era filing or payment deadlines should review their records before July 10, 2026.
They may not be owed anything. But if they were charged penalties or interest during the affected period, it may be worth checking transcripts, talking to a qualified tax professional, and considering whether a protective claim is appropriate.
For InsightArea, the lesson is simple: big systems often fail people not only through bad rules, but through complexity. A right that exists on paper can disappear in practice if people do not know it exists, do not understand it, or cannot access it in time.
Important note: This article is for general information only and is not legal, tax, or financial advice. Taxpayers should review their own situation and consider speaking with a qualified tax professional before filing any claim.
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