GoKawiilA Major Refund Opportunity – But Taxpayers Must Act to Protect Their Rights
Tens of millions of taxpayers may be entitled to refunds or abatements of penalties and interest that the IRS assessed during the nearly 3.5-year COVID-19 federal disaster period. However, this relief will not happen automatically. To protect their rights, most taxpayers must file a claim for refund – generally by July 10, 2026.
This situation highlights a core concern I have raised repeatedly: When relief exists but is difficult to access, taxpayers – especially those without representation – are at risk of losing benefits.
That outcome undermines fundamental taxpayer rights, including the rights to be informed, pay no more than the correct amount of tax, and to a fair and just tax system.
Understanding the Kwong Decision and Its Implications
This issue arises from recent court decisions, most notably Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025), interpreting a tax code provision that governs disaster-related filing and payment deadline postponements. IRC § 7508A(d), as it existed when the COVID-19 federal disaster was declared, provides for the automatic postponement of filing and payment deadlines during the period a federal disaster declaration is in effect, plus 60 days.
For COVID-19, a federal disaster declaration was in effect from January 20, 2020, through May 11, 2023. Sixty additional days extended the period to July 10, 2023, for tax purposes. Based on the court’s reasoning in Kwong, filing and payment deadlines were postponed during that entire period, and as a result, tax returns and payments due anytime within that window were not late until after July 10, 2023. By the court’s logic, the IRS should not have assessed penalties for late filing or payment during that 3.5-year period, nor charged interest on those amounts.
The government’s pleadings interpreted the postponement statute more narrowly and disagreed that the statute suspended filing and payment obligations for 3.5 years. I anticipate the Department of Justice will appeal the decision.
But the Kwong opinion is explicit in saying: “The plain meaning of that statute is that the automatic extension runs from the beginning of the disaster declaration, through the end of the declared disaster period, and until 60 days after the end of the declared disaster period.” It may take several years until the issue is finally resolved by the courts.
What This Means for You
... continue reading