Could the Kwong v. United States Ruling Mean You’re Eligible for an IRS Refund?
Key Points
- The Kwong v. United States ruling may affect certain IRS penalties and interest assessed during the COVID period.
- Eligible taxpayers could have a potential refund opportunity.
- The decision remains under appeal and outcomes are uncertain.
- Refunds are not automatic.
- Filing may be time-sensitive.
- IRS Form 843 may help preserve rights depending on individual circumstances.
A recent federal court ruling may create a refund opportunity for taxpayers who paid IRS penalties or interest during the COVID-19 period. Grimbleby Coleman’s Tax Team is sharing this update to help clients stay informed and preserve potential rights while the matter continues through the legal process.
Understanding the Decision
In Kwong v. United States, No. 23-267 (2025), the U.S. Court of Federal Claims held that COVID-19 disaster declarations automatically extended certain IRS tax filing and payment deadlines nationwide through July 10, 2023 (60 days after the COVID-19 emergency period ended).
The court found that the postponement period under Section 7508A ran from January 20, 2020, to July 10, 2023. As a result, the taxpayer’s deadline to file a refund lawsuit under Section 6532 was suspended until July 10, 2023.
The ruling may also affect IRS penalties and interest because those amounts are generally calculated from original filing and payment deadlines. Taxpayers may therefore argue that penalties and interest should not have accrued during the extension period and may seek abatement or refunds.
Who Should Review Their Tax Situation?
You may wish to review your situation if you were assessed during the period from January 20, 2020, through July 10, 2023, for the following:
Potentially affected taxpayers may include:
The Ruling is Still Under Appeal
The government has not accepted the ruling, and the IRS has filed an appeal of the decision on May 15, 2026.
The appellate court may affirm, limit, or overturn the lower court’s decision, but until a ruling is issued, or unless the IRS chooses to follow the decision in the Kwong case, claims submitted under Kwong are not anticipated to be routinely approved.
How to File a Protective Claim and Why it Matters
Even if you qualify, the IRS is not automatically issuing refunds. Taxpayers must take action to preserve potential rights while litigation continues, but keep in mind that filing a claim does not guarantee a refund.
Taxpayers can submit a Claim for Refund and Request for Abatement using IRS Form 843 by the deadline of July 10, 2026. Missing the deadline could limit the ability to pursue a refund later if the ruling is ultimately upheld.
If a taxpayer submits a refund claim, the IRS may issue a notice denying it. In that case, the taxpayer can either appeal the decision through the Appeals process or file a refund lawsuit in federal district court. If the IRS does not deny the claim, the taxpayer may initiate a refund suit once six months have passed since the claim was filed.
Get in Touch
Every situation is unique. Grimbleby Coleman’s Tax Team encourages clients to connect with us before taking action so we can help determine whether additional review may be beneficial. Contact our team to discuss the best course of action for you.