The Kwong ruling
In Kwong v. United States, decided by the U.S. Court of Federal Claims in late 2025, the court held that the IRS improperly charged penalties and interest during the COVID-19 pandemic by failing to apply the automatic deadline postponement required under IRC § 7508A(d). That statute postpones federal tax deadlines for the duration of any FEMA-declared incident period plus 60 days. Because COVID-19 was declared a nationwide disaster under the Stafford Act, the postponement reached every U.S. taxpayer.
The practical effect: penalties and interest that accrued on filings or payments due between January 20, 2020 and July 10, 2023 — the postponement window — were assessed against an incorrect statutory due date. The new effective due date for those obligations is July 11, 2023. Anything the IRS assessed on the original (pre-postponement) deadline is recoverable.
Under IRC § 6511, a refund claim must be filed within the later of three years from the original filing date or two years from the date the penalty or interest was paid. For most taxpayers affected by the COVID-era postponement, that window closes on July 10, 2026. After that date, the refund is permanently forfeited — no matter how strong the legal grounds.
What penalties qualify
The Kwong analysis applies to any penalty or interest charge tied to a deadline that fell within the postponement window. In practice, that includes:
- Failure-to-File (FTF) penalties — assessed when a return was deemed late under the pre-postponement deadline.
- Failure-to-Pay (FTP) penalties — assessed when a balance due was deemed late.
- Underpayment interest and late-payment interest accrued during the window.
- Estimated-tax penalties, where the underpayment was tied to a postponed deadline.
- Certain information-return penalties — protective claims are advisable where the return was due in the window.
Who is eligible
The disaster declaration was nationwide, so eligibility is not geographically restricted. Eligible taxpayers include:
- Individuals (any filing status)
- Businesses — LLCs, S-corps, C-corps, partnerships, sole proprietors, 1099 contractors
- Nonprofits
- Estates and trusts with returns due in the window
Eligibility does not depend on whether the underlying return was filed late by choice, by hardship, or for any other reason. The legal question is whether the IRS applied the postponement; it almost universally did not.
What our process looks like
We handle COVID-era abatement on a contingency basis — no upfront cost, no recovery means no fee. The steps:
- You sign Form 8821. A one-page authorization that lets us pull your IRS account transcripts.
- We pull transcripts for the 2019–2023 tax years and flag every penalty or interest line that accrued in the postponement window.
- We prepare Form 843 with a legal-support memorandum citing Kwong, IRC § 7508A(d), and the FEMA disaster declarations. You sign the form (Form 843 requires a wet signature).
- We file directly with the IRS service center handling your account and track the matter through resolution. Most refunds are issued within 60–120 days.
Because Kwong is recent and government appeals are possible, the conservative move is to file a protective refund claim immediately. A protective claim preserves your statutory right to the refund even if the underlying law evolves during the claim's adjudication. Filing now is materially better than waiting for further case development.
Why now
The July 10, 2026 deadline is a hard statutory cutoff under IRC § 6511. The IRS has no discretion to extend it. Filing earlier in the window also generally results in faster processing — IRS service centers are expected to see a substantial volume of Kwong-grounded claims through the spring and summer of 2026.
Start with the calculator on this page. Enter your name, business email, and a rough estimate of the penalties and interest you paid for the affected years. We respond within one business day with a case-specific refund estimate based on the analysis above.