People who were penalized by the IRS during the COVID-19 pandemic for filing late, failing to pay taxes, or missing required estimated tax payments may qualify for a refund or for penalties to be terminated or abated, but the relief is not automatic, according to the IRS’s independent watchdog and tax professionals.
The Office of the National Taxpayer Advocate said that most affected taxpayers need to submit a claim by July 10 to preserve their opportunity to receive money back. The advocate’s warning comes as a federal court ruling held that taxpayers were not required to file on time during the COVID-19 period covered by emergency relief laws, while the case continues to be litigated.
The court case is Kwong v. U.S. The dispute centered on how COVID-19 emergency laws changed filing deadlines, and the taxpayer advocate described the issue as widespread rather than limited to a small group. The advocate said in guidance that eligible taxpayers should check their IRS account transcripts through their online accounts to identify penalties assessed during the relevant timeframe.
The penalties at issue were assessed on taxpayers who were late with returns, late with payment of taxes, or did not make required estimated tax payments between January 2020 and July 11, 2023. The IRS assessed more than 120 million penalties against tens of millions of taxpayers during that period, according to the account described in the reporting.
The government’s position has not fully aligned with the court’s interpretation. Ken Kies, assistant secretary at the Treasury Department, told The Associated Press that the Trump administration believes the Kwong decision was wrongly decided because it misreads the statutory language, and he said the government will continue to defend the law “as written.”
A tax attorney who advises taxpayers on the matter said people should file paperwork to preserve their claims even as litigation proceeds. Alyssa Maloof Whatley, a director at Frost Law, said taxpayers should fill out the required form so they can preserve their right to any money if the court ruling applies.
For taxpayers seeking relief, the advocate said the typical process requires filing Form 843 by mail. The advocate said that eligible taxpayers include those who filed a tax return late between Jan. 20, 2020, and July 11, 2023, those who paid penalties for filing or paying late during that period, those who were owed IRS penalties even if they did not pay them, and those who filed an international information return late.
According to the IRS, Form 843 must be mailed to the service center where a taxpayer would be required to file a current-year tax return. The taxpayer advocate urged people not to delay reviewing their situation and considering potential claims for refund and abatement before the July 10 deadline, saying the affected group includes many taxpayers with low and moderate incomes who may be less likely to have professional representation.