Time is rapidly running out for eligible Americans to claim a potentially significant windfall of extra cash from the federal government. Thanks to a recent landmark federal court ruling in the case of Kwong v. United States, many taxpayers who paid IRS penalties and interest during the COVID-19 pandemic may now be legally entitled to a full refund. During the height of the global health emergency, the IRS postponed numerous tax deadlines to ease the burden on households; however, the court found that these deadline extensions should have also delayed when the agency was legally allowed to begin charging late-filing fees and interest. Because the IRS continued to apply these charges prematurely, millions of everyday citizens and businesses may have been wrongfully billed, and the government is now on the hook to return that money to its rightful owners.
While the exact amount of money waiting to be returned remains a mystery, financial experts suspect the total figure could be massive. Millions of Americans face late fees and interest charges in any normal fiscal year, and the confusion of the pandemic only multiplied those numbers. Accounting scholars point out that because this administrative mishap impacted such a broad segment of the population over a span of several years, the collective payout could be staggering. For individual taxpayers, this isn’t just about pennies; it could translate to a substantial chunk of change that would provide some much-needed relief in today’s high-inflation economy. However, the catch is that the IRS will not automatically send you this money—you have to actively step forward and claim it before the fast-approaching deadline of July 10.
To determine if you are eligible for this unexpected payday, you must meet specific criteria outlined by the Taxpayer Advocate Service. Generally, you qualify if you filed a tax return during the official COVID-19 disaster relief period—spanning from January 20, 2020, through July 10, 2023—and were hit with penalties or interest. You also qualify if you still owe money for late payments during this timeframe, if you filed late international information returns, or if you completely missed out on refunds, refundable credits, withholding credits, or estimated tax payments for the affected tax years. Remarkably, these potential refunds might even extend to people who missed out on standard refund opportunities for the tax years 2019 through 2022, opening the door for a very wide net of eligible taxpayers.
Of course, dealing with the IRS is rarely a guaranteed slam dunk, and taxpayers should prepare for a few different outcomes. Once you submit your claim, the IRS will review your case and could either approve it, deny it, or simply not respond. If your claim is approved, the outcome is highly positive: any outstanding tax balance you owe will be reduced, or, if you have already paid the penalties, you will receive a direct refund check. If the IRS denies your claim, or if they fail to respond to your request within six months, you retain the legal right to protest their decision or sue them in court, a path heavily supported by the precedent set in the Kwong ruling. The most important thing to keep in mind is that if you do absolutely nothing and let the July 10 deadline pass, you will permanently forfeit your legal right to claim this money.
For those eager to safeguard their money, experts advise filing what is known as a “protective claim” with the IRS. Doing this essentially pauses the clock, ensuring your claim remains legally valid and active even if the litigation surrounding these pandemic-era tax laws drags on in court for years to come. Because tax laws are notoriously dense and confusing, it is highly recommended to review your past tax returns or seek help from a trusted accountant or tax professional who can guide you through the specifics of your situation. Helpful resources and detailed self-help guides have popped up online, including dedicated platforms like covidtaxrefunds.com, to help everyday folks navigate the eligibility rules without getting bogged down in legal jargon.
When you are ready to take action, the IRS has provided a couple of different paths to submit your claim, including an online option launched on July 1 that allows taxpayers with an active IRS online account to file Form 843 electronically. If you prefer to handle things the traditional way, you can print, fill out, and mail a paper copy of Form 843 directly to the Internal Revenue Service at 1973 N Rulon White Blvd., Ogden, UT 84201. If you choose to send your claim through the mail, it is absolutely critical that you write “Kwong vs. United States” clearly across the top of the form so the IRS processing center knows exactly why you are writing. Whichever filing method you choose, the clock is ticking loudly, so gather your old tax documents and file your claim before the July 10 cutoff.
