A Recent Court Case May Create Refund Opportunities for Some Taxpayers
A federal court decision known as Kwong v. United States may allow certain taxpayers to recover IRS penalties and interest assessed during the COVID disaster period.
The IRS is appealing the decision, so the outcome is not yet final. However, many tax professionals are recommending that potentially affected taxpayers preserve their rights before the July 10, 2026 deadline.
Quick Eligibility Check
Answer These Three Questions
- Did you pay IRS penalties or interest between 2020 and 2023?
- Were the charges related to filing late, paying late, estimated tax penalties, or other IRS assessments?
- Did the penalties and interest total more than a few hundred dollars?
If you answered “Yes” or “Not Sure” to most of these questions, you may benefit from a review of your IRS account to determine whether a protective refund claim should be filed before the July 10, 2026 deadline.
Taxpayers Most Likely to Benefit
You may want a review if you:
- Paid failure-to-file penalties
- Paid failure-to-pay penalties
- Paid estimated tax penalties
- Paid IRS interest charges
- Had penalties assessed on business tax returns
- Received multiple IRS notices during 2020–2023
- Entered into an IRS payment arrangement during the COVID years
Taxpayers Less Likely to Benefit
A review may not be necessary if:
- You never paid IRS penalties or interest
- All penalties were previously removed by the IRS
- The amount involved is minimal
- Your tax issues arose entirely after July 10, 2023
Important Deadline
Potentially affected taxpayers should consider taking action before July 10, 2026. Waiting too long could result in losing the opportunity to pursue a refund if the courts ultimately uphold the Kwong decision.
Frequently Asked Questions
Am I guaranteed a refund?
No. The IRS has appealed the decision, and the final outcome remains uncertain.
Will the IRS automatically send refunds?
Generally, no. Taxpayers may need to take action to preserve their rights.
What if I don’t know whether I paid penalties or interest?
Our office can review your IRS account transcripts and determine whether further action may be appropriate.
Free Kwong Eligibility Review
If you paid IRS penalties or interest, received IRS notices, or had an IRS payment plan during 2020–2023, contact our office for a preliminary review. We can help determine whether pursuing a protective claim makes sense for your situation before the July 10, 2026 deadline.