You’ve likely heard a dozen times that the pandemic relief era is over. The checks stopped coming, the world moved on, and you probably haven’t thought about your 2020 or 2021 taxes in years. But here’s the thing: tens of millions of people are currently sitting on money the IRS took from them—money they shouldn't have paid in the first place. Thanks to a massive court ruling that basically flipped the script on how the government handled pandemic deadlines, you have until July 10, 2026, to get that cash back.
This isn't about some obscure stimulus check you missed. It’s about the IRS being forced to admit, through legal pressure, that their clock-watching during the pandemic was technically illegal. If you paid penalties for filing late or interest on "overdue" payments between early 2020 and mid-2023, you’re likely owed a refund. And no, the IRS isn’t going to just mail it to you. You have to go get it.
The Court Ruling That Changed Everything
In late 2025, a landmark case called Kwong v. United States hit the IRS where it hurts. The U.S. Court of Federal Claims looked at the law and decided the IRS didn't have the authority to charge many of the penalties they handed out during the COVID-19 disaster period.
Here’s the logic. The tax code has a specific provision—Section 7508A(d)—that kicks in during federally declared disasters. It’s supposed to automatically postpone filing and payment deadlines. When the pandemic hit, the government declared a nationwide disaster, but the IRS tried to cherry-pick which deadlines they’d move and which they’d keep. The court basically said, "Nice try, but that’s not how the law works."
Since the COVID-19 disaster declaration lasted from January 20, 2020, through May 11, 2023, the law effectively paused the clock for that entire period plus an extra 60 days. That means any tax return or payment due in that window wasn’t actually "late" until after July 10, 2023. If the IRS hit you with a failure-to-file or failure-to-pay penalty before that date, they did it based on a deadline that shouldn’t have existed.
What’s Actually Up for Grabs
We aren’t talking about pennies here. For some business owners and individuals, these penalties and the interest stacked on top of them run into the thousands or even tens of thousands of dollars. You’re looking at three main buckets of money:
- Failure-to-File Penalties: If you sent your 2020, 2021, or 2022 return in late but before July 10, 2023, and got dinged, you’re a prime candidate.
- Failure-to-Pay Penalties: Even if you filed on time but couldn't pay the full amount right away, those monthly late fees shouldn't have started accruing until the disaster period ended.
- Underpayment Interest: This is the big one people miss. The IRS charges interest on what you owe. If the "due date" was legally postponed, that interest shouldn't have started ticking until much later than the IRS claimed.
Honestly, the IRS is banking on you being too tired of "COVID talk" to bother checking. Don't fall for it.
Identifying Your Eligibility
The easiest way to see if you're owed money is to pull your IRS Tax Account Transcript. You can do this through the IRS website. You're looking for specific "transaction codes" that show up as penalties or interest assessments between 2020 and 2023. If you see a "Failure to File" or "Failure to Pay" charge during that window, you have a claim.
The July 10 Deadline is a Hard Stop
The reason July 10, 2026, is the magic date is simple: it’s exactly three years from the end of that legally mandated disaster postponement. Under standard IRS rules, you generally have three years from a filing date to claim a refund. Because the Kwong ruling effectively moved the goalposts for when returns were "due," it also moved the deadline for when you can ask for your money back.
If you wait until July 11, the door slams shut. The IRS is currently fighting this in court (of course they are), but that doesn’t matter for your filing. You need to get your claim in now to "preserve" your rights.
How to File Without Losing Your Mind
You can't do this through TurboTax or H&R Block's standard e-file software. This requires Form 843, Claim for Refund and Request for Abatement. It’s a paper form. Yes, you have to use a pen and a stamp.
When you fill it out, you need to be very specific. Across the top of the form, many experts suggest writing something like "Protective Refund Claim Pursuant to Kwong Case". This tells the IRS exactly why you’re asking for the money back and ensures that even if the court case continues to be litigated for another year, your claim is "locked in" as of the date you mailed it.
Common Mistakes to Avoid
Most people mess this up by being too vague. Don't just say "IRS charged me too much." You need to list the specific tax year (like 2021) and the specific amount of the penalty or interest you want back. If you don't know the exact dollar amount, look at your transcript.
Another huge mistake is assuming this only applies to 1040 individual returns. It doesn't. International information returns, payroll tax penalties, and even corporate interest charges are all potentially on the table if they happened during that 3.5-year window.
The Strategy of the Protective Claim
You might be wondering why you should bother if the government is still appealing the Kwong decision. It’s called a protective claim. Think of it as a placeholder. By filing Form 843 before July 10, 2026, you're telling the IRS: "If the courts ultimately decide you owe this money back, I’m first in line."
If you don't file, and the courts rule against the IRS in 2027, you’ll be out of luck because your statute of limitations will have expired. Filing now is the only way to stay in the game.
Your Immediate Checklist
Stop reading and do these three things right now:
- Log into your IRS Online Account and download your transcripts for tax years 2019, 2020, 2021, and 2022.
- Scan for penalties. Look for any charges labeled "Failure to Pay" or "Failure to File" that were assessed during the pandemic years.
- Download Form 843. Fill it out, mention the Kwong case, and mail it via certified mail so you have proof of the postmark.
The IRS isn't your friend, and they aren't going to volunteer this information. They’re holding billions of dollars in "illegal" penalties, and they’re hoping you’re too busy to notice the July 10 cutoff. Prove them wrong. Grab a pen, fill out the form, and get your money back.
