Full Breakdown
July 10 2026 Deadline Opens Path for COVID-Era Tax Penalty Refunds
7/10/2026, 5:05:12 PM
Core Event: Protective Claims Must Be Filed by July 10 2026
A federal court decision in Kwong v. United States extended the COVID-19 disaster filing period (January 20 2020 – May 11 2023) by 60 days, moving the statutory deadline to July 10 2023. Because taxpayers normally have three years from filing (or two years from payment) to seek a refund, the extension creates a July 10 2026 deadline for filing a protective claim for any penalties, interest, or over-payments assessed during the disaster period. The Internal Revenue Service (IRS) now offers an electronic Form 843 “Claim for Refund and Request for Abatement” on its mobile-friendly forms page, allowing eligible individuals to submit a protective claim online or by paper.
Legal Background: Kwong Ruling and Statutory Interpretation
The Court of Federal Claims interpreted Section 7508A(d) of the Internal Revenue Code to mandate a mandatory postponement of tax filing and payment deadlines whenever a federal disaster declaration is in effect. The court held that the COVID-19 emergency regulations automatically suspended those deadlines from January 20 2020 through May 11 2023, and that the 60-day grace period ended on July 10 2023. The Treasury Department disagrees, arguing that the postponement statute should be read more narrowly, and has indicated an intent to appeal. Until the litigation resolves, the protective claim preserves a taxpayer’s right to a potential refund but does not guarantee payment.
Who Can Claim: Eligibility Criteria
The National Taxpayer Advocate, Erin Collins, outlines four primary categories of eligible taxpayers:
1. Those who filed a return during the disaster period and were assessed penalties or interest.
2. Those who paid or still owe penalties or interest for late filing or payment in that period.
3. Taxpayers who filed international information returns late.
4. Taxpayers who believe they missed a refundable credit, withholding credit, estimated-tax-payment credit, or other benefit for tax years covered by the postponement.
Numbers at Stake
- The IRS assessed more than 120 million penalties for late filings, late payments, or missed estimated-tax payments between January 2020 and July 2023.
- Tens of millions of individual taxpayers, many with low or moderate incomes, may be entitled to refunds or abatements of those penalties and associated interest.
Official Statements & Responses
Collins emphasizes that the relief is not automatic; taxpayers must proactively file a claim, preferably using the new electronic portal. She notes that the Department of Justice is expected to appeal the Kwong decision, meaning the legal landscape remains unsettled. The IRS has added Form 843 to its online filing tools but has not issued formal guidance on how the ruling will affect future processing of refunds. Tax professionals advise filing a protective claim now to preserve rights while the case proceeds.
Criticism & Opposition
Advocacy groups warn that the appeal by the Treasury could overturn the extended deadline, leaving many taxpayers—particularly those without professional representation—without recourse. The complexity of the legal development increases the risk that eligible taxpayers will miss the filing window, effectively forfeiting any refund they might otherwise receive.
Verbatim Quotes
- “However, this relief will not happen automatically. To protect their rights, most taxpayers must file a claim for refund – generally on or before July 10, 2026,” — Erin Collins, National Taxpayer Advocate
- “Many taxpayers affected by this issue have low and moderate incomes,” Collins said. “These taxpayers are less likely to have professional representation and to learn about complex legal developments like this one. As a result, they face a greater risk of missing the opportunity to claim refunds to which they may be entitled.” — Erin Collins, National Taxpayer Advocate
- “A protective claim can preserve a taxpayer’s right to a refund while the law remains unsettled,” — Erin Collins, National Taxpayer Advocate
- “taxpayers should not delay reviewing their situation and considering potential claims for refund and abatement,” — Erin Collins, National Taxpayer Advocate
What’s Next
The Treasury Department’s appeal will be heard by the Court of Federal Claims later this year. Until a final ruling is issued, the IRS will continue to accept protective Form 843 claims through the July 10 2026 deadline, after which any unfiled claims will be barred by the statute of limitations.
