During the COVID‑19 pandemic, many taxpayers were charged IRS penalties and interest for filing late, paying late, or owing estimated tax. Recent court decisions interpreting the disaster‑relief rules in place at the time have created a meaningful opportunity: some taxpayers may have viable claims to seek refunds or abatements of certain penalties or interest assessed during the COVID disaster period.
For many people, the key date to preserve these rights is July 10, 2026. That date does not apply to everyone, but it is important enough that taxpayers should take a closer look now rather than later.
Here’s what’s happening, why it matters, and what steps you can take.
Why This Matters to You
Penalties and interest can add up quickly, especially during a period when many individuals and businesses were dealing with shutdowns, staffing shortages, and financial uncertainty. These developments may affect:
Individuals who filed or paid late during 2020–2023
Businesses with late payroll, sales tax, or income tax filings
Trusts and estates with delayed filings
Anyone who paid underpayment interest during the COVID period
Taxpayers who assumed old penalties were final because they already paid them
If the taxpayer‑favorable interpretation of the law ultimately prevails, some of these charges may be eligible for refund or abatement review. But relief is not automatic — taxpayers generally must file a timely claim to preserve their rights.
What’s Behind This Issue (In Plain English)
Federal law allows certain tax deadlines to be postponed during federally declared disasters. For COVID‑19, the disaster period lasted far longer than most people realized.
Two recent court decisions interpreting the pre‑2021 version of IRC § 7508A(d) have reshaped how that postponement period may apply:
1. The postponement may have been automatic
In Abdo, the Tax Court held that the COVID postponement rule was mandatory and self‑executing, not limited to the shorter extensions the IRS announced in its notices.
2. The postponement period may have been much longer
In Kwong, the Court of Federal Claims held that the COVID postponement period ran from January 20, 2020 through July 10, 2023.
If that interpretation holds, some penalties and interest may have been assessed too early, or during a period when they may not have accrued.
These cases are still developing — and Kwong is currently under appeal — but they have created a significant opportunity for taxpayers to review their accounts before the commonly cited July 10, 2026 preservation date.
What You Can Do on Your Own Right Now
You don’t need to be a tax expert to take the first step. A simple review can help you determine whether this issue might apply to you.
1. Review IRS notices or your IRS online account
Look for:
Failure‑to‑file penalties
Failure‑to‑pay penalties
Underpayment interest
Estimated tax penalties (these involve different rules and may be less straightforward)
Business‑related penalties tied to filing or payment deadlines
Focus on charges connected to late filings or late payments between January 20, 2020 and July 10, 2023.
2. Determine whether the amounts were paid
This affects the type of claim:
Paid amounts may be eligible for refund review
Unpaid amounts may be eligible for abatement review
Both types of requests are typically made using Form 843.
3. Note when you filed and when you paid
These dates determine your deadline for filing a claim.
For many taxpayers, the three‑year‑from‑filing rule leads to July 10, 2026, but your specific date may be earlier or later depending on your facts.
4. Download your IRS transcripts
Your transcripts show assessment dates, payments, and penalty entries. They’re available through your IRS online account.
5. Don’t wait for complete certainty
The law is still evolving, and some issues are under appeal. But waiting for final clarity could mean missing your filing window entirely.
How Our Firm Can Help
This is a highly technical area, but the process is manageable with the right guidance. Our team is closely following the developing rules and court decisions so clients don’t miss opportunities.
Here’s how we support you:
1. Identify whether you’re affected
We review your IRS transcripts, notices, and payment history to determine whether COVID‑period penalties or interest may be eligible for review.
2. Calculate your exact deadline
Your preservation date may be:
July 10, 2026
A later “two‑years‑from‑payment” date
Or another date based on your filing and payment history
We make sure nothing slips through the cracks.
3. Evaluate the strength of your claim
Not all penalties are treated the same. Estimated tax penalties, for example, involve different statutory rules and may be less straightforward. We help determine whether your situation fits the emerging legal framework.
4. Prepare and file the necessary claims
Whether you need a formal refund claim or a protective claim, we handle the process from start to finish.
5. Track all follow‑up deadlines
Refund claims have their own timelines. We monitor everything — including IRS responses and next‑step requirements — so your rights remain protected.
The Bottom Line
Recent court decisions have created meaningful opportunities for taxpayers to seek refunds or abatements of certain penalties and interest assessed during the COVID‑19 disaster period. For many, July 10, 2026 is a critical date to preserve those rights — but it is not universal.
A short review now could prevent a missed opportunity later.
If you think you may have been charged penalties or interest during 2020–2023 — or if you simply want clarity — our team is here to help you understand your options and protect your rights.