The IRS May Owe You Money — But You Have Until July 10th

Did the IRS hit you with a late penalty during COVID? A failure-to-file? An underpayment notice? A court just ruled that most of those charges weren’t valid. And you have until July 10, 2026 to claim your money back.

What is the Kwong v. United States case?

Kwong v. United States is a November 2025 ruling by the U.S. Court of Federal Claims. The court held that a 2019 federal law  IRC Section 7508A(d)  automatically suspended virtually every federal tax deadline for the full duration of the COVID-19 national emergency. That suspension ran from January 20, 2020 through July 10, 2023. That’s 1,267 days.

It started with Terry Kwong, a California real estate business owner who’d been fighting old IRS penalties. When he finally sued to get his money back, the government said he was too late — the two-year window to file had closed. Kwong said the pandemic had legally paused that clock. The court agreed. And that agreement now affects millions of taxpayers.

What penalties and interest does this cover?

If the IRS hit you with any of these between January 2020 and July 2023, they may owe you that money back:

“Think of it this way. Your landlord tells everyone rent is suspended. Three years later, they try to charge you late fees for that exact same period. A court would throw that out immediately. That’s essentially what happened here — the IRS charged penalties during a window Congress had legally frozen. The court said: not valid.”

Who could qualify for a refund?

Basically, if you had any kind of tax obligation during the pandemic including personal, business, or payroll,  you’re potentially in play. Individual filers, small business owners, corporations, partnerships, employers. The ruling is broad.

And if your business claimed the Employee Retention Credit, listen up. A lot of ERC filers got hit with surprise interest on their income tax returns afterward — a side effect of how the credit works. Under Kwong, that interest may have been illegal too. For some businesses, that’s a significant number.

How do you file a claim and what’s the deadline?

The IRS is not going to send you a check automatically. You have to file what’s called a protective refund claim. It’s a simple filing that preserves your eligibility while the case works through appeals.

1. Pull your IRS transcripts to see exactly which penalties and interest were assessed and when.
2. Fill out IRS Form 843 (Claim for Refund and Request for Abatement) — one form per tax year.
3. Cite IRC §7508A(d) and Kwong v. United States. Include this exact language: “This is a protective refund claim pending the final outcome of Kwong v. United States.”
4. Send via certified mail with return receipt. You need proof of the date it was filed.

CRITICAL DEADLINE: July 10, 2026 — For most 2019–2022 tax years, this is the last day to file a protective refund claim. Miss it and you likely lose your eligibility for good.

Is this a sure thing?

Not yet. The government has appealed, and the legal fight isn’t over. But here’s why that doesn’t matter right now: filing a protective claim costs you nothing. If Kwong wins on appeal, you get the refund. If it loses, you’re out nothing. That’s a pretty easy call.

Tax law almost never works in your favor. This one does. Talk to a tax professional soon — and don’t let July 10th sneak up on you.

Take action before the deadline.

Contact our office at 832-303-3995 or schedule a consultation  to determine whether you qualify for a refund under the Kwong ruling.

Source: Kwong v. United States, U.S. Court of Federal Claims (Nov. 2025) · IRC §7508A(d) · This article is for informational purposes only and does not constitute tax or legal advice. Consult a qualified tax professional before filing a claim.