This blog is a reminder and quick reference to my four-part series on recent legal developments involving IRC § 7508A(d) and Kwong v. United States. As explained in Part I, under the reasoning of Kwong, certain filing and payment deadlines falling from January 20, 2020, through July 10, 2023, were postponed through July 10, 2023.
If that reasoning ultimately prevails, tens of millions of taxpayers may be entitled to refunds or abatements of penalties and interest assessed for returns or payments the IRS treated as late during that period. The potential impact may also extend to some taxpayers who missed refund opportunities for tax years 2019 through 2022.
But the relief will only be provided to taxpayers who file timely refund claims. For most taxpayers, that means filing a claim on or before July 10, 2026.
Taxpayers who miss the filing deadline will not be eligible for relief even if the Kwong decision is upheld.
Why July 10, 2026, Matters
In most cases, taxpayers must file a claim for credit or refund within the later of three years from the date they filed the return, or two years from the date they paid the tax, penalty, or interest. If, under the reasoning of Kwong, affected returns or payments are treated as due on July 10, 2023, then July 10, 2026, is a critical deadline for many refund or protective claims.
A protective claim can preserve a taxpayer’s right to a refund while the law remains unsettled. Filing a claim does not guarantee relief. But missing the deadline may permanently prevent taxpayers from receiving a refund to which they may ultimately be entitled.
In my view, this is not a fair result for taxpayers. When potential relief exists but taxpayers must know to ask for it, unrepresented taxpayers, low-income taxpayers, and taxpayers who cannot easily obtain transcripts or professional help are at special risk of losing refunds. In fact, I suspect only a tiny fraction of potentially eligible taxpayers will file timely claims.
Who Should Review Their Records
Taxpayers should review their records if they:
- Filed a return during the COVID-19 disaster relief period and were assessed penalties or interest related to that return;
- Paid or still owe penalties or interest for filing or paying late during that period;
- Filed late international information returns; or
- Believe they may have missed a refund, refundable credit, withholding credit, estimated tax payment credit, or other tax benefit for tax years affected by the COVID-19 postponement period.
As explained in Part II, a practical first step is to review IRS tax account transcripts. Taxpayers do not need to understand every line of a transcript. They should focus on whether the transcript shows penalties, interest, payments, refund activity, or other account activity from January 20, 2020, through July 10, 2023, or for tax years potentially affected by that period.
How to Protect Your Rights
As discussed in Part III, taxpayers who already paid penalties or interest may need to file a refund claim. Taxpayers who have been assessed penalties or interest, but have not paid, generally need to request abatement. Because abatements of unpaid amounts are not refunds, they are not governed by the same refund claim deadline, but taxpayers should still act promptly.
For Kwong-related penalty and interest claims, taxpayers generally should use Form 843, Claim for Refund and Request for Abatement, unless they need to change the underlying tax liability. If taxpayers need to change income, deductions, credits, filing status, or other items affecting their tax liability, they generally should file the appropriate original or amended return instead of using Form 843.
As described in more detail in Part III, a protective claim should identify the taxpayer, the tax year or years involved, the penalties, interest, payments, or refund items at issue, and the legal basis for the claim (IRC § 7508A(d) and the Kwong case). Taxpayers should keep copies of everything they submit and consider using certified mail or another method that provides proof of timely mailing.
Certain individual taxpayers who have an IRS Online Account may submit their Form 843, Claim for Refund and Request for Abatement, electronically through a new secure application available on IRS.gov located on the Mobile-friendly forms web page. For taxpayers who want to file by mail, please identify your submission as being related to Kwong v. United States by writing “Kwong vs. United States” across the top when completing the Form 843. Taxpayers who choose not to use the electronic submission option, have the option of completing the current paper version of Form 843 for interest and penalties and mail the form to:
Internal Revenue Service
1973 N Rulon White Blvd.
Ogden, UT 84201
Do Not Overlook Missed Refunds for Tax Years 2019 Through 2022
As discussed in Part IV, the potential impact of Kwong may not be limited to penalties and interest. Some taxpayers who overpaid taxes for tax years 2019 through 2022 may still need to consider whether they have time to file original returns, amended returns, refund claims, or protective claims.
This may include taxpayers who had withholding, estimated tax payments, refundable credits, Recovery Rebate Credits, or other tax benefits for those years. Because the law remains unsettled, taxpayers should not assume they are ineligible without reviewing their individual circumstances.
An Important Note
This is a complex and evolving legal issue. This blog is intended to raise awareness – not to provide legal advice. Taxpayers should review their individual circumstances and consider seeking professional guidance where appropriate.
Conclusion
July 10, 2026, is quickly approaching. Taxpayers who may be affected should review their records now and consider whether they need to file a refund claim, an amended return, original return, abatement request, or a protective claim.
This is not just a technical deadline; it is a taxpayer rights issue. If relief ultimately becomes available, taxpayers should not lose it simply because they did not know they had to act before the courts finished deciding the issue.
Taxpayers should also be cautious of anyone promising guaranteed refunds or pressuring them to file claims they do not understand. The law remains unsettled, and taxpayers should review their individual circumstances and consider seeking help from a trusted tax professional where appropriate.
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