Kwong refund claims after the July 10 protective deadline

Recent court decisions involving Kwong v. United States and Abdo v. Commissioner have raised important questions for tax professionals regarding the IRS's disaster-relief authority and its potential impact on clients affected by the federally declared COVID-19 disaster period.

Although Kwong remains on appeal and the IRS disputes the decision’s broader application, some clients may still have options after July 10, 2026, but the answer depends on the affected deadline, payment date, penalty or interest charged and whether the amount remains unpaid.

Tax pros should no longer treat July 10 as an open filing date. Instead, they must determine whether a client has a separate refund-claim period based on a later payment, an unpaid assessment that may still be challenged or a protective claim that was filed before the deadline.

The following top questions and answers highlight key issues tax pros should understand when reviewing potentially affected clients, including when a protective refund claim may be appropriate and when to file Form 843, Claim for Refund and Request for Abatement.

What if your client filed late?

Q: What about the clients who filed their 2019 through 2023 returns in November 2024? They paid the tax and penalties when they received the IRS letter for the total amount due. The IRS has not yet processed the 2019 and 2020 returns. However, the clients paid the tax upon receiving the notices. Is the client still eligible to file Form 843 for a refund of the penalties and interest or is it too late?

A: For the 2019-2022 returns, the taxpayer can still request a refund of the interest and penalties by filing Form 843 for each year if they are within two years of the payment date or three years from filing. The 2023 return falls outside the potential Kwong postponement because its original filing and payment deadlines arose after July 10, 2023.

Q: The taxpayer filed a 2023 tax return in 2024 but didn’t pay the tax until March 2025. Does he qualify to apply by filing Form 843 for abatement of penalties and interest?

A: No. Because the return was filed after the time periods in question, the taxpayer is subject to the standard statute of limitations.

What about those penalties?

Q: Would a civil penalty assessed in 2022 under §6038A for failure to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, qualify under this case?

A: If a taxpayer was assessed a penalty under §6038A for a period covered by §7508A(d) under the statutory interpretation and the Kwong court’s holding, then the penalty was improperly imposed because §7508A(d) suspended the accrual of such penalties.

Q: If the taxpayers filed late but haven’t paid the penalties and interest during this potential relief period, do they still file a refund claim? What is done to request removal of the penalties and interest?

A: If the taxpayers qualify, they should file Form 843 requesting an abatement of the penalties assessed during the potential relief period.

Q: If you file an original 2021 tax return in 2022 and then file an amended return in 2025, does the postponement or tolling period start from the 2025 filing, or are we responding regarding the 2021 filing return?

A: The tolling period starts from the date of the original return.

Can a client still file Form 843 after July 10, 2026?

Possibly. July 10, 2026, was the critical protective-claim deadline identified for many taxpayers, but §6511 allows a refund claim within the later of three years from the date the return was filed or two years from the date the amount was paid.

A client who paid penalties or interest after July 10, 2024, may still be within the two-year payment-based period. That does not mean the claim will succeed. It means the practitioner should calculate the limitation period using the client’s actual filing and payment dates before concluding that the opportunity has expired.

What should tax pros do now?

Start with the client’s account transcripts. Confirm when each return was filed, when the IRS assessed the penalties or interest, whether the amounts were paid and whether prior COVID-19 relief was applied. Then calculate the limitation period separately for every affected year.

Clients who filed protective claims before July 10, 2026, should retain proof of filing and the complete claim package while the Kwong appeal continues. Clients who did not file by that date should not be dismissed automatically if they made a later payment or still have unpaid assessments.

The law remains unsettled. Filing Form 843 preserves or asserts a taxpayer’s position, but it does not guarantee that the IRS or a reviewing court will allow relief. As cases like Kwong and Abdo continue to shape the tax landscape, these top questions and answers provide practical guidance for addressing common issues when applying the courts’ decisions to real-world client situations.

For a deeper review of the decisions and the statutory arguments behind these claims, access NATP’s Kwong and Abdo Impact on IRS Penalties and Interest on-demand webinar.