WASHINGTON — The Internal Revenue Service’s independent watchdog said tens of millions of U.S. taxpayers may qualify for refunds or reduced penalties and interest tied to filing delays during the COVID-19 emergency period, following recent court rulings on federal disaster declarations.
The National Taxpayer Advocate said in a notice Thursday that taxpayers who were assessed penalties or interest between Jan. 20, 2020, and May 11, 2023, may be eligible for relief. The period covers the federal COVID-19 disaster declaration, during which filing and payment deadlines were effectively postponed.
The guidance follows court decisions, including a ruling in the “Kwong” case, which interpreted the tax code to mean that deadlines remained suspended throughout the disaster declaration period. As a result, certain penalties and interest may have been improperly applied.
The taxpayer advocate said the U.S. Department of Justice may appeal the ruling, and noted that any relief is not automatic. Taxpayers must file refund claims, generally using Form 843, by July 10, 2026, to seek reimbursement.
The office said eligible claims may include penalties for failure to file or pay taxes on time, interest that accrued earlier than it should have, and issues related to overpayment interest during the covered period.
The advocate said most taxpayers and tax professionals did not anticipate that filing deadlines would be extended for the full duration of the emergency declaration, which contributed to the widespread assessment of penalties and interest.
The office also warned that, without action by the IRS or Congress to provide broader relief, affected taxpayers must act individually to file claims before the deadline.
Because claims must be submitted on paper, the advocate advised taxpayers to send forms by certified mail to document timely filing. The office also recommended that the IRS expand public outreach, consider extending the filing deadline, and explore options for automatic or electronic processing of claims.
The taxpayer advocate urged tax professionals, lawmakers, and media organizations to inform the public about the potential relief and the filing requirements.
