Some taxpayers may be able to recover COVID-era IRS penalties and interest, but the process is not automatic. The Taxpayer Advocate Service says most people who believe they qualify generally must file a refund claim by July 10, 2026, or risk losing the opportunity. The potential relief follows a federal court decision involving how disaster-related tax deadlines applied during the COVID-19 period.
The key decision for a taxpayer is practical: check whether the IRS charged you failure-to-file or failure-to-pay penalties, or related interest, during the affected years, then determine whether a claim is appropriate before the deadline. The legal theory is significant, but it is not yet a final guarantee of payment.
Why could COVID-era penalties be refundable?
The issue centers on Section 7508A(d) of the Internal Revenue Code as it existed when the COVID-19 federal disaster was declared. That provision postponed certain filing and payment deadlines during a federal disaster and for an additional 60 days.
The federal disaster declaration ran from January 20, 2020, through May 11, 2023. The Taxpayer Advocate Service says the additional 60-day period extended the relevant tax deadline to July 10, 2023. In Kwong v. United States, the court reasoned that filing and payment deadlines were postponed throughout that period. Under that interpretation, some penalties assessed for late filing or late payment, along with interest on those amounts, may not have been properly charged.
That is the mechanism behind the possible refund: the claim is not based simply on the fact that the tax was connected to the pandemic. It depends on whether a taxpayer was charged qualifying penalties or interest during the period covered by the court’s interpretation.
Who should check their records?
Taxpayers who paid or owed IRS failure-to-file or failure-to-pay penalties, or interest connected to those charges, may have a reason to investigate. TurboTax identifies tax years 2019 through 2022 as potentially relevant, but the official Taxpayer Advocate Service description frames eligibility around returns and payments due during the legally protected window.
That distinction matters. A taxpayer should not assume that every balance, penalty or interest charge from the pandemic years qualifies. The evidence supplied does not establish a universal refund amount, a complete list of eligible taxpayers or an automatic IRS adjustment for every account.
The first useful step is to review IRS tax transcripts for the relevant years. TurboTax says taxpayers can access transcripts through an IRS Individual Online Account and should look for failure-to-file or failure-to-pay penalties and interest. Records from a tax preparer or filing software may help, but the IRS account is the more direct place to check the charges recorded on the taxpayer’s account.
What must taxpayers do before July 10?
The Taxpayer Advocate Service says most taxpayers must file a refund claim by July 10, 2026, to protect their rights. TurboTax identifies Form 843 as the form used for its described claim process, but taxpayers should confirm the appropriate filing method for their specific account and circumstances rather than assume that every case follows the same procedure.
Keep copies of transcripts, notices, payment records and the claim submitted. If the account history is difficult to interpret, professional tax advice may be useful because the possible relief depends on the type and timing of the charge. The deadline is the immediate practical constraint; waiting for the legal dispute to end could leave too little time to preserve a claim.
What is still unresolved?
The government has not accepted the broadest reading of the statute. The Taxpayer Advocate Service says government pleadings interpreted the postponement provision more narrowly and disagreed that it suspended filing and payment obligations for the entire three-and-a-half-year disaster period. The service also anticipates that the Department of Justice will appeal the ruling.
That creates a trade-off for taxpayers. Filing a claim before the deadline may preserve a potential right, but filing does not prove eligibility or guarantee that the IRS will pay it. The final outcome could depend on the appeal, further court decisions and how the IRS applies any controlling interpretation.
This possible refund program is also separate from the automatic COVID penalty relief the IRS provided in 2022, according to TurboTax. Receiving earlier relief does not by itself establish that a taxpayer qualifies for an additional refund, and not receiving it does not prove that a new claim will succeed.
The next verifiable milestone
The clearest milestones are procedural: taxpayers can review their transcripts and determine whether a timely claim is available, while the government’s expected appeal and any subsequent IRS guidance could clarify the scope of the ruling. Until those developments occur, the responsible conclusion is limited: some taxpayers may have a claim, the deadline is July 10, 2026, and the underlying legal question remains contested.
The possible COVID-era tax refund is best understood as a deadline-sensitive legal claim, not an automatic IRS payment. The official Taxpayer Advocate Service says the court’s reasoning in Kwong could affect penalties and interest assessed during the federal disaster period, while TurboTax provides a practical record-checking path through IRS transcripts. The unresolved appeal is central: it could narrow or alter the relief available. Taxpayers who see potentially qualifying charges should investigate and preserve a claim before July 10, 2026, but should not treat eligibility or payment as settled until the courts or IRS provide further clarity.
Sources and methodology
- Tens of Millions of Taxpayers May Be Eligible for Refunds - https://www.taxpayeradvocate.irs.gov/news/nta-blog/tens-of-millions-of-taxpayers-may-be-eligible-for-significant-tax-refunds/2026/04
- COVID-Era Tax Refunds: File Form 843 by July 10 - https://blog.turbotax.intuit.com/tax-forms/covid-era-tax-refund-file-form-843-151799
- The unintended consequences of COVID-19 vaccine policy - https://pmc.ncbi.nlm.nih.gov/articles/PMC9136690
