A federal court has ruled that the IRS wrongly charged interest and penalties to tens of millions of taxpayers during the COVID-19 pandemic. The IRS is fighting the ruling, but that does not mean you should wait.
If you owed taxes between January 20, 2020, and July 10, 2023, the IRS may owe you a refund — but you have to ask. And the deadline to ask is July 10, 2026.
Key Takeaways
• A federal court ruled the IRS should not have charged penalties and interest during COVID.
• The IRS disagrees and has appealed. It will not send you a refund on its own.
• You have until July 10, 2026 to file a claim and protect your right to a refund.
• After that date, you lose your chance — no matter how the appeal turns out.
Why Did This Happen?
When the president declared COVID a national disaster in 2020, a federal law called I.R.C. § 7508A required the IRS to automatically stop charging penalties and interest. The law said this protection had to last for the entire disaster period — from January 20, 2020 (when COVID was declared) through July 10, 2023 (60 days after the disaster officially ended).
The IRS did not do that. Instead, it kept charging penalties and interest, arguing that the law only required it to stop for one year, not three and a half.
Two federal courts have now disagreed with the IRS. The most recent ruling — Kwong v. United States — found that the law is clear: the protection lasted the full length of the COVID disaster. The IRS has appealed that ruling, but while the appeal is pending, it is not giving anyone their money back.
Who May Be Owed a Refund
You may qualify if the IRS charged you any of the following between January 20, 2020 and July 10, 2023:
• A penalty for filing your tax return late
• A penalty for paying your taxes late
• A penalty for not making estimated tax payments
• Interest on an unpaid tax balance
This applies to individuals, self-employed people, business owners, and corporations. If you had a large tax balance during COVID — whether from income taxes, payroll taxes, or a tax dispute — the amount the IRS may owe you could be significant.
What You Need to Do
You need to file what is called a protective refund claim. This is a formal request that tells the IRS you believe you are owed money and that you want to preserve your right to get it back.
Filing this claim does not mean the IRS will immediately pay you. It means your place in line is saved while the courts finish deciding the case.
If you do not file before July 10, 2026, you permanently lose your right to a refund — even if the court later rules in taxpayers’ favor.
The IRS will not remind you. It will not file on your behalf. You have to take action.
Common Questions
What if the court sides with the IRS on appeal?
Taxpayers who filed claims can still pursue a refund based on other legal arguments, including a separate law Congress passed in December 2025 that supports the same result. Filing a protective claim keeps your options open either way.
What if I already paid everything I owed?
You can still file a claim for a refund of penalties and interest that were wrongly charged. The refund deadline is three years from July 10, 2023 — which is July 10, 2026 — or two years from when you made the payment, whichever is later.
What if my tax issues started before January 2020?
You may still qualify. If you had an unpaid balance before the pandemic, the interest and penalties that kept building during the COVID period may be refundable.
Does this apply to state taxes?
No. This only applies to federal IRS taxes. State tax rules are different and vary by state.
What if I already settled with the IRS?
It depends on your settlement terms. Do not assume a prior settlement blocks your claim — have an attorney review it first.
The Deadline Is July 10, 2026
The court has not finished deciding this case. The IRS has appealed, and that process could take months or years. The deadline to file your claim will not wait for the courts.
Wiggam Law focuses exclusively on tax law. We know this case inside and out, and we know how to file a claim that holds up. We will use every legal argument available to protect your refund.
Schedule a consultation today. The deadline is July 10, 2026.
