Tax refunds may await millions, act by July 10

According to the National Taxpayer Advocate, taxpayers assessed penalties or interest tied to COVID-era filing or payment deadlines may have a potential refund or abatement opportunity under the reasoning of Kwong v. United States. Tax professionals should review affected clients now because relief is not automatic. In most cases, taxpayers should file Form 843, Claim for Refund and Request for Abatement, by July 10, 2026, and consider making the filing as a protective claim if the taxpayer’s rights depend on the final outcome of Kwong. 

The Kwong decision and its implications

This issue arises from recent court decisions, including Kwong v. United States (Court of Federal Claims, Nov. 25, 2025) and Abdo v. Commissioner (U.S. Tax Court, 2024), both of which addressed §7508A(d), the disaster postponement provision. At the time of the COVID-19 federal disaster declaration, §7508A(d) provided for the automatic postponement of certain filing and payment deadlines for the period the federal disaster declaration was in effect, plus 60 days.

For COVID-19, a federal disaster declaration was in effect from Jan. 20, 2020, through May 11, 2023. Sixty additional days extended the period to July 10, 2023, for tax purposes. Based on the court’s reasoning in Kwong, filing and payment deadlines were postponed during that entire period, and as a result, tax returns and payments due anytime within that window were not considered late until after July 10, 2023. If the court’s reasoning ultimately controls, the IRS may need to refund or abate affected penalties and related interest.

The government’s pleadings interpreted the postponement statute more narrowly and disagreed that the statute suspended filing and payment obligations for 3.5 years.

But the Kwong opinion is explicit in saying: “The plain meaning of that statute is that the automatic extension runs from the beginning of the disaster declaration, through the end of the declared disaster period, and until 60 days after the end of the declared disaster period.” It may take several years for the issue to be finally resolved by the courts.

When COVID-era facts may still support relief

Under Kwong, the issue is not whether each taxpayer had reasonable cause for late filing or payment. The issue is whether certain filing and payment deadlines were automatically postponed during the COVID-19 federal disaster period.

Tax professionals should review clients who were assessed failure-to-file or failure-to-pay penalties, related interest or estimated tax penalties that may require separate analysis under §6654, for years affected by the Jan. 20, 2020, through July 10, 2023, disaster period.

What Form 843 is designed to do

Form 843 is used to request refunds or abatements of specific items, including:

• Certain penalties 
• Interest (in limited cases) 
• Additions to tax 
• Some fees 

It is not a general refund form. The IRS is clear that Form 843 should not be used to request an income tax refund or to amend a return. Instead, it is meant for targeted relief. That distinction matters when dealing with COVID-era issues.

How to use the form and key deadlines

Form 843 has strict boundaries. Do not use it for:

• Income tax refunds 
• Amended income tax returns 
• Amended employment tax returns
• Employer claims for FICA, RRTA or income tax withholding refunds or abatements

This is where mistakes often happen. Filing the wrong form can delay relief or lead to outright denial. For claims seeking a credit or refund, timing matters. Generally, taxpayers must file within three years from the date the return was filed or two years from the date the tax was paid, whichever is later. These deadlines are critical for COVID-era claims because many affected years are approaching, or may already have passed, key filing windows.

Most taxpayers will need to file claims by July 10, 2026. Because the law in this area is still being litigated, taxpayers should also consider filing protective claims to preserve their rights.

Taxpayers with ongoing examinations, Appeals proceedings, or litigation may have open statutes for the applicable years that provide additional time to claim a refund. They should assess the impact of the Kwong issue on any settlement discussions or on their litigation approach.

Building a strong protective claim

A protective claim allows you to preserve your right to a refund while the law is still uncertain. You don't need to calculate the exact amount of your requested refund.

Under the IRM 25.6.1.10.3.2.5(2) provision, a valid protective claim does not need to state a specific dollar amount or demand an immediate refund. However, it must identify and describe the contingency affecting the claim, clearly alert the IRS to the essential nature of the claim and identify the specific tax year or years involved.

For a Kwong-related protective claim, taxpayers may write “Protective Refund Claim Pursuant to Kwong Case” or similar language across the top of Form 843 and include the penalties or interest at issue, the affected year or years and a short explanation that the claim is being filed to preserve rights while the Kwong issue remains unresolved.

Taxpayers may also use Form 843 to request abatement of assessed but unpaid penalties or interest.

Timing of processing a paper Form 843

Because Form 843 must be filed on paper, taxpayers should plan for slower processing and use certified mail or another trackable method to document timely filing. Protective claims are typically held while the underlying legal issue is resolved, so resolution may take time. The National Taxpayer Advocate has urged the IRS to create an electronic filing option for these claims to reduce taxpayer burden and administrative strain.

Quickly identify clients affected by the Kwong decision

NATP's partner, Tax Help Software, has a tool to help you quickly identify which clients may benefit from these filings.

This video shows how the tool works: 

If this tool would be useful for your practice, Tax Help Software is offering NATP members a special rate of $249 for a fully loaded Executive License for three months.