Possible Hidden IRS COVID Refunds: Eligibility Window Closing Soon for Taxpayers
Some taxpayers in the United States may still be eligible for a COVID-era refund from the Internal Revenue Service, but officials warn that the time to act is limited. The issue is linked to a legal interpretation of tax deadline extensions during the COVID-19 public health emergency, which may have affected penalties, interest charges, and overpayments for certain years.
The situation stems from a case known as Kwong vs. United States, where the court examined how tax deadlines should be treated during federally declared disaster periods. The ruling focused on a tax law provision stating that when a disaster is declared, certain filing deadlines are automatically postponed for the duration of the emergency plus an additional 60 days.
According to this interpretation, the COVID-19 public health emergency period, which lasted from January 20, 2020, to May 11, 2023, qualifies under the rule. When adjusted with the additional 60-day extension, the effective filing deadline for affected tax years—2019, 2020, 2021, and 2022—would have shifted to July 10, 2023.
Because of this adjustment, questions have been raised about whether penalties and interest that were charged during this extended period were correctly applied. The National Taxpayer Advocate, an independent office within the U.S. tax system that works to protect taxpayer rights, has stated that some individuals may be entitled to refunds if they were incorrectly charged penalties, early interest, or overpayment discrepancies during the disaster period.
The Advocate has also expressed concern that many affected taxpayers may not be aware of this issue. In particular, individuals with low to moderate incomes who do not use tax professionals are considered more vulnerable to missing this opportunity.
While the Internal Revenue Service and the Department of Justice are reportedly preparing to appeal the ruling, the National Taxpayer Advocate has advised taxpayers to take precautionary steps. This includes reviewing their tax records to determine whether any penalties or interest were applied during the COVID-19 relief period.
Taxpayers can check their account transcripts directly through IRS records or request them if they are not already available. These transcripts typically show detailed information about penalties, interest charges, and payment history.
If taxpayers discover potential errors or charges that may fall under the court’s interpretation, they may file a claim for adjustment or refund. This is typically done using IRS Form 843, which is used for requesting refunds or abatement of certain taxes, penalties, and interest. The form should clearly state that the claim is being made as a protective filing related to the Kwong vs. United States decision.
Officials have also emphasized the importance of submitting claims carefully and maintaining proof of mailing, such as certified mail receipts, to ensure proper documentation.
Experts note that eligible taxpayers may include those who were charged failure-to-file penalties, failure-to-pay penalties, estimated tax penalties, or incorrect interest calculations during the disaster period. In some cases, overpayment interest adjustments from 2020 to 2023 may also apply.
The final deadline to file a protective claim for these potential refunds is July 10, 2026. After this date, taxpayers may lose the opportunity to recover any eligible amounts connected to this ruling.
As the situation continues to develop, taxpayers are encouraged to review their records carefully and take action well before the deadline to avoid missing possible refunds tied to the COVID-19 tax relief period.
Sources:
Internal Revenue Service (IRS) guidance and tax records information
National Taxpayer Advocate official statements
Kwong vs. United States court case ruling
U.S. federal tax code provisions on disaster-related deadline extensions
