The IRS deadline to file a protective claim for COVID-era penalty and interest refunds passed on July 10, 2026. If you didn’t file by then, the window to preserve that specific refund right has closed — even though the underlying legal fight over whether the IRS wrongly charged those penalties is still ongoing.
What This Was About
A federal court, in a case known as Kwong v. United States, found that the IRS had improperly assessed certain penalties and interest during the federally declared COVID-19 disaster period — January 20, 2020 through July 10, 2023 — because filing and payment deadlines were arguably automatically suspended during that window under disaster-relief provisions in the tax code.
That ruling opened the door for taxpayers who were hit with failure-to-file penalties, failure-to-pay penalties, estimated-tax penalties, or underpayment interest during that period to potentially get some of that money back — but only if they filed a formal refund claim (IRS Form 843) before the statute of limitations closed.
Who the Ruling Applied To
The population affected was fairly specific, not every taxpayer from 2020–2023:
- Taxpayers assessed failure-to-file or failure-to-pay penalties during the COVID disaster period
- People who paid underpayment interest on 2019–2022 tax returns
- Overseas-based U.S. small business owners assessed pandemic-era penalties
- Retirees and expats who paid late-payment interest, or who received late-filing penalties on international information returns (Forms 5471, 3520, or 8938) for filings due between January 20, 2020, and July 10, 2023
Why the Deadline Mattered So Much
The IRS is still appealing the Kwong ruling, and the issue likely won’t be finally resolved for years. That created an unusual situation: taxpayers had to file a protective claim now, before knowing whether they’d ultimately win, because the refund statute of limitations doesn’t pause just because a related legal question is unresolved. Missing the July 10, 2026 deadline means losing the right to claim a refund for penalties or interest from that period — permanently, regardless of how the appeal eventually turns out.
If You Filed a Claim Before the Deadline
The IRS is not currently issuing refunds under Kwong. Claims filed before the deadline are being set aside until the legal question is fully settled, which could take years given the pending appeal. Filing on time preserved your right to a refund if the ruling ultimately stands — it didn’t get you a check right away.
If You Missed the Deadline
If you didn’t file a protective claim by July 10, 2026, your opportunity to claim a refund of COVID-period penalties and interest under this specific ruling has closed. This is true even if the IRS eventually loses its appeal — the formal claim needed to be on file before the statute of limitations ran out, independent of the merits question.
This doesn’t affect other, separate avenues for penalty relief — the general First-Time Abatement program and standard reasonable-cause penalty relief requests are unrelated to Kwong and follow their own, ongoing rules; missing the Kwong deadline doesn’t close those other doors.
What to Do If You Think You Qualified and Missed It
Confirm with a tax professional whether any other refund window still applies to your specific situation — for instance, if your original penalty assessment falls within the standard 3-year refund statute of limitations independent of Kwong, that separate route may still be open. Don’t assume the Kwong deadline was your only chance without checking the specifics of your own filings.
Frequently Asked Questions
Can I still file a Kwong-related refund claim now?
Generally no — the July 10, 2026 deadline to preserve this specific refund right has passed for claims tied to the COVID-era disaster-period penalty and interest assessments.
Will the IRS notify people who missed the deadline?
There’s no indication of a general notification process for taxpayers who didn’t file — the deadline applied based on public IRS guidance rather than individual outreach.
If the IRS loses its appeal, will refunds be issued automatically to everyone affected?
No. Based on how the claims process has worked so far, a formal claim on file before the deadline is what’s required to be eligible — the IRS is not treating this as an automatic, everyone-affected refund.
Is this the same as the separate First-Time Penalty Abatement program?
No. First-Time Abatement is a standing, unrelated IRS program with its own ongoing eligibility rules and isn’t affected by the Kwong deadline passing.