COVID-Era IRS Penalties: Can You Get Them Back?

What the two cases say

The first is Abdo v. Commissioner, decided by the U.S. Tax Court on April 2, 2024. The court held that section 7508A(d), the law that postpones tax deadlines during a federally declared disaster, is mandatory and runs on its own, and it struck down a Treasury regulation that had tried to narrow it. Abdo was about a deadline to file a Tax Court petition, and it is now final.

The second is Kwong v. United States, decided by the U.S. Court of Federal Claims on November 25, 2025. Applying the same reading, the court held that the COVID disaster postponement ran the full length of the declared disaster, from January 20, 2020 through July 10, 2023, which is 60 days after the declaration ended on May 11, 2023. The takeaway practitioners draw from it: the IRS lacked authority to assess failure to file penalties, failure to pay penalties, and underpayment interest on deadlines inside that window.

Who this could affect

Anyone, individual or business, who paid a failure to file penalty, a failure to pay penalty, an estimated tax penalty, or underpayment interest on a federal tax obligation due between January 20, 2020 and July 10, 2023. Because COVID was declared a nationwide disaster, almost every U.S. taxpayer meets the geographic test. Two limits worth knowing: FBAR penalties sit under a different law and are not covered, and none of this touches your present year taxes, which are still due on time.

Why the deadline is July 10, 2026

Normally you have three years from filing, or two years from payment, to claim a refund under Internal Revenue Code section 6511. For most pandemic years that window has already closed. The Kwong reading disregards the disaster period when counting, which pushes the effective deadline out to July 10, 2026 for most affected taxpayers. A separate law signed December 26, 2025, the Disaster Related Extension of Deadlines Act, gives a second and independent basis by fixing the refund lookback to include disaster postponements. Miss July 10, 2026 and the claim is gone, even if the courts later side with taxpayers.

How a protective claim works

The vehicle is Form 843, Claim for Refund and Request for Abatement. A protective claim preserves your right while the law is unsettled.

• Pull your IRS account transcriptsFind the penalties and interest assessed on deadlines inside the window.
• Complete Form 843 for each year and typeIdentify the tax year, the penalty or interest type, and the amount paid.
• Label it clearlyWrite "Protective Refund Claim Pursuant to Kwong v. United States" across the top, and cite the Disaster Related Extension of Deadlines Act as a second basis.
• Attach proof and send certified mailNotices, transcripts, or canceled checks, postmarked before July 10, 2026.

The IRS may hold the claim in suspense rather than pay it. That is expected and keeps your position alive until the appeal is resolved.

The honest risks

This is not settled law. Kwong is a trial level decision from the Court of Federal Claims, not a nationwide rule, and the government has appealed it to the U.S. Court of Appeals for the Federal Circuit. A higher court could uphold it, narrow it, or reverse it, and the process may take years. The IRS has not agreed with the decision and is not issuing these refunds now. No one can promise you a refund. The reason to act anyway is the calendar: a protective claim costs little and preserves the option, while waiting past July 10, 2026 forecloses it for good.

The legal basis