The Kwong v. United States Decision: A Path to IRS Refunds

A late-2025 court decision from the U.S. Court of Federal Claims, Kwong v. United States, has opened a path for individuals, companies, and nonprofits to recover IRS penalties and interest charged during the COVID-19 disaster period. 

The court held that Internal Revenue Code § 7508A(d) automatically postponed federal tax filing and payment deadlines for the entire FEMA-declared incident period, plus 60 days.  

Who is eligible for a Kwong refund?

Eligibility under Kwong is broader than many taxpayers initially assumed:

• Individuals and Entities: Includes all individuals, businesses, and nonprofits with obligations due between Jan. 20, 2020, and Jul. 10, 2023.
• Geographic Scope: Because COVID-19 was a nationwide disaster, nearly all U.S. taxpayers meet the qualified taxpayer geographic requirement.
• Pre-existing Accruals: Taxpayers whose original due date preceded Jan. 20, 2020, may still have relief arguments for the portion of interest/penalties that accrued within the disaster period.
• Other Penalties: Estimated tax penalties and certain information-return penalties may also be eligible for protective claims.

Deadlines: How long do I have to file a claim?

Refund claims are generally limited by IRC § 6511 to the later of three years from the filing deadline or two years from payment. Because Kwong treats the COVID-19 period as extending deadlines through July 10, 2023, for most taxpayers, the deadline to file refund or abatement claims is July 10, 2026.

Filing a protective claim is crucial to preserve your rights while the government potentially appeals this decision. Filing a claim does not guarantee you will receive a refund, but not filing a claim will assure you will not receive any refund. 

Step-by-Step: How to Pursue Your Refund

1. Pull IRS Account Transcripts: Using your IRS.gov account, review account transcripts for tax years 2019 to 2023 and flag any penalty and interest entries. 
2. Map the Accrual Dates: Any charges accruing between Jan. 20, 2020, and Jul. 10, 2023, deserve a closer look.
3. Prepare Form 843: File a Claim for Refund and Request for Abatement.
4. Include Legal Support: Attach a concise statement citing IRC § 7508A(d) and Kwong, along with relevant transcripts and notices.
5. Calendar Deadlines: Coordinate your timing for administrative claims and potential refund suits (a refund suit generally must be filed within two years of the administrative refund claim submission). 

Frequently Asked Questions

Does it matter if the IRS assessed the charges after July 10, 2023?

No, we believe the key is when the charges accrued. If the amounts accrued during the disaster window, Kwong indicates they should not have accrued at all, regardless of when the IRS finally assessed them. 

Is the Kwong decision final?

Not yet. It is a U.S. Court of Federal Claims decision. While persuasive nationwide and consistent with other cases, it may face further appeals and could ultimately be overturned by a higher court. This is why we recommend filing protective claims now to preserve your rights. 

What penalties are most likely to be refunded?

Failure-to-file, failure-to-pay and underpayment penalties, along with any interest on unpaid tax and penalties, that accrued during the 2020 to 2023 window.