Contributed by: KristineS, FreeTaxUSA Agent, Tax Pro
Were you charged or did you owe penalties and interest to the IRS during the COVID-19 pandemic? If so, you may be eligible for a credit or refund of these penalties and interest assessed between January 20, 2020, and July 10, 2023, as a result of the recent Kwong v. United States ruling. This applies to individuals, businesses, estates, trusts, etc.
What is the Kwong case?
The National Taxpayer Advocate published a three-part series to better understand the Kwong case. Here is a portion of Part I:
“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.”
How do I know if this applies to me?
For most individuals, this means reviewing your IRS Account Transcript history to find penalties and interest assessed between January 20, 2020 – July 10, 2023. In the example below, we can see interest was assessed March 28, 2022, in the amount of $15,769.97, and a penalty in the amount of $16,011.52 was also assessed. Both of these fall inside the January 20, 2020 – July 10, 2023, window and therefore qualify for the refund.
Follow these steps to find your Account Transcripts in your IRS account online:
- Go to: Your Account Internal Revenue Service > Individual (or Business)
- If you haven’t already done so, you’ll need to verify your ID with ID.me and create your IRS.gov account.
- After signing in, select Records and Status at the top of the Welcome screen for individuals.
- Choose Tax Records in the drop-down menu.
- On the Tax Records screen, select View transcripts. Choose Account Transcript.
- A PDF will open. Scroll down.
- Near the bottom of the first page or beginning of the second page look for the word TRANSACTIONS in all capital letters.
Look through your account transcripts for penalties and interest assessed during the January 20, 2020 – July 10, 2023, timeframe. These may be eligible for a refund under the Kwong case. Depending on your situation, the amount could range from a few hundred dollars to tens of thousands of dollars.
You may need to review multiple years of account transcripts. The National Taxpayer Advocate series continues:
“Under the reasoning of the Kwong decision, you may be entitled to a refund or abatement of certain amounts assessed during the COVID period, including:
- Penalties assessed for failure to timely file returns, failure to pay taxes, or failure to make estimated tax payments;
- Interest that began accruing earlier than it should have, or not at all; and
- Overpayment interest for the 2020–2023 disaster period.”
Is my refund guaranteed?
No, a refund is not guaranteed. The IRS is appealing the Kwong decision. This means additional time in court before a final determination is made. However, your right to file a protective claim to receive a possible future refund must be filed on or before July 10, 2026, using Form 843, Claim for Refund and Request for Abatement.
Filing Form 843 is filing a protective claim only. This means if the Kwong decision is upheld at the highest level of court, the IRS will issue refunds. If you don’t file the form on or before July 10, 2026, you’ll lose your opportunity to claim a refund.
What form do I file?
File Form 843, Claim for Refund and Request for Abatement, to protect your right to claim a refund of penalties and interest. FreeTaxUSA doesn’t support Form 843. You’ll need to print the form, fill it out, and mail it. You cannot electronically file Form 843.
Use one form per calendar year. This one form might include two or three charges of interest and penalties, or more. We recommend you mail one Form 843 per envelope.
If you’re a business with penalties and interest for payroll tax, use one Form 843 per quarter.
Write “Protective Refund Claim Pursuant to Kwong Case” or something similar across the top.
Select “Other” as the reason you’re filing the form and write “7508A(d) COVID Refund Window for relevant penalties and interest”
Fill in lines 1 – 8 with as much detail as possible. For each tax period, enter the dates of the period or periods for which you were charged with interest or penalties, along with the amount. This information should come from your account transcripts.
Sign and date at the bottom. Keep a copy for your records.
Mail on or before July 10, 2026. Remember, the U.S. Postal Service has updated it’s postmark date system. Your mailbox or the mailbox at the nearest street corner may or may not be date stamped the same day you drop it off.
FreeTaxUSA recommends you use USPS certified mail return receipt requested.
We also strongly recommend that you do not mail more than one form per envelope. The IRS mailroom has an automated system for opening mail and processing. If you mail more than one Form 843 per envelope, there is a high probability that all forms in the one envelope will be stapled together. This means only one claim would be considered filed, and that’s the top page.
Read more here in Part II and here in Part III for additional information and guidelines from the National Taxpayer Advocate.