Did You Pay IRS Penalties During the Pandemic? You Could Be Owed a Refund

If you feel like you were unfairly penalized by the IRS during the chaotic years of the pandemic, you might be right and the law is finally catching up.

A significant legal development, the case of Kwong v. United States, has created a vital window of opportunity for taxpayers in Texas and across the country. If you were hit with "failure-to-file" or "failure-to-pay" penalties for tax years affected by the pandemic, you might be sitting on a tax refund that is legally yours to reclaim.

Document detailing tax liabilities, including penalties and interests applied on 11-21-2022.

Why This is Happening Now

The court ruling suggests that federal disaster declarations effectively postponed filing and payment deadlines for nearly three and a half years. Because many taxpayers and tax professionals were unaware of these extended protections at the time, penalties were assessed and paid when they shouldn't have been.

According to the IRS National Taxpayer Advocate, tens of millions of taxpayers, from individual filers to small business owners, could be eligible for refunds or abatements of these penalties and interest.

A person calculates their tax refund.

The July 10, 2026, Deadline

This is not a suggestion; it is a critical statutory deadline. For most taxpayers, the window to file a formal claim (using Form 843) to recover these funds expires on July 10, 2026.

If you wait past this date, you risk permanently losing your right to claim these funds, even if the court rulings eventually favor taxpayers across the board.

An IRS Form 843 for a protective claim is prepared.

How to Know if You Qualify

You don’t have to guess. The experts at the Taxpayer Advocate Service recommend taking these three steps immediately:

1. Request your Tax Account Transcripts: Look specifically for penalty or interest charges assessed between January 20, 2020, and July 10, 2023.

2. Review the Penalties: Check if they relate to "failure to file," "failure to pay," or "estimated tax" penalties.

3. File a Protective Claim: Because the law is still evolving, many tax professionals suggest filing a "protective claim" to preserve your rights while the litigation continues.

A happy couple making a proactive claim for their COVID taxes.

Stop Leaving Your Money on the Table

Navigating IRS bureaucracy, especially when it involves complex disaster relief rules and formal refund claims can be overwhelming. At Tax Solution Pro Advisor, we specialize in identifying these hidden refund opportunities for our clients in Texas and beyond.

Don't let an administrative error keep your money in the government's pocket. We can help you audit your past transcripts and determine if you are eligible for a refund before the July deadline.

Ready to see if the IRS owes you a refund? Contact Tax Solution Pro Advisor Today for a Consultation