How to Claim COVID-19 Tax Penalty and Interest Refunds

Tens of millions of Americans may be eligible for refunds on tax penalties and interest charges issued by the Internal Revenue Service (IRS) during the COVID-19 pandemic. The potential for relief depends on the outcome of ongoing legal challenges regarding how tax deadlines were handled during the federal disaster declaration.

Recent court rulings, specifically in the case of Kwong v. United States, determined that tax payment and filing deadlines should have been automatically postponed from Jan. 20, 2020, through July 10, 2023. This period covers the duration of the COVID-19 disaster declaration, with an additional 60 days added to the window.

“By the court’s logic, the IRS should not have assessed penalties for late filing or payment during that 3.5-year period, nor charged interest on those amounts,” National Taxpayer Advocate Erin M. Collins explained in recent blog posts.

Erin M. Collins

Collins noted that the Department of Justice is expected to challenge the decision, and the legal process could take years to resolve. However, if the ruling is upheld, taxpayers who were assessed charges during that period may be owed refunds, provided they take steps to preserve their eligibility within the coming weeks.

Eligibility for Potential Refunds

Eligibility for these potential refunds extends to a wide range of taxpayers, including individual Americans, estates, trusts, small businesses, and large corporations.

Under the logic of the court’s decision, anyone charged penalties for late filing or late payment during the disaster declaration period, as well as the subsequent 60 days, may be entitled to a refund. This also includes taxpayers who were assessed interest that began accruing during that timeframe or those who overpaid interest during that period.

people or entities that were penalized for failing to file foreign information tax forms—used to report international assets, trusts, or gifts—on time may also be eligible for refunds.

How to Verify Potential Claims

Taxpayers can determine if they were charged penalties or interest during the relevant window by reviewing their federal income tax transcripts. These documents summarize tax payments and any associated charges.

Transcripts are available through the IRS website, where individuals and businesses can register for accounts using the agency’s ID.me service. Alternatively, transcripts can be requested via mail, a process that typically takes five to 10 days for delivery.

Collins advised taxpayers to examine their transcripts for any penalty or interest charges dated between Jan. 20, 2020, and July 11, 2023. If such charges exist, "taxpayers may want to explore a refund claim," she said.

Filing Deadlines

The IRS generally requires refund claims to be submitted within three years of the date a tax return was filed, or within two years of the date the taxes were paid.

For most taxpayers seeking COVID-era relief, the deadline to submit claims is July 10, 2026. This date is three years after the postponed filing and payment deadline following the end of the pandemic disaster declaration, based on the court’s ruling.

Some taxpayers may have a later deadline if they paid their penalties or interest after the initial window. Collins provided an example of a taxpayer who did not make a payment until July 1, 2025; such an individual "would have until July 1, 2027, (i.e., two years from the date of payment) to file a refund claim, as it is later than July 10, 2026."

The Process for Filing a Claim

To protect their rights to a refund or abatement, eligible taxpayers should use Form 843, “Claim for Refund and Request for Abatement.” Because the Kwong ruling is not yet final, taxpayers can file what is known as a “protective claim.” These claims are typically used when a pending legal matter makes the exact amount of a potential refund uncertain.

Collins recommended that taxpayers specifically label their Form 843 with the phrase "Protective Refund Claim Pursuant to Kwong Case."

When completing the form, taxpayers should follow these guidelines:

• Submit separate forms for each type of tax and each tax period, unless the Form 843 instructions explicitly allow for them to be combined.
• Clearly state that the claim is based on the legal reasoning in the Kwong case and the COVID-19 disaster relief period.
• Identify the specific dates, tax periods, and penalties or interest at issue.

Protective claims may also be filed for penalties and interest that have been assessed but not yet paid.

Unlike standard annual tax returns, Form 843 must be submitted on paper. Collins noted that this process is slower, less accessible, and more difficult to track. Because the IRS does not provide confirmation of receipt for these claims, she advised taxpayers to send the forms via certified mail to ensure they have legal proof of delivery in the event of a dispute.

“The claim should clearly state that your claim is based on the COVID-19 disaster relief period and the legal reasoning reflected in Kwong,” Collins wrote. “It should also identify the specific penalties and interest, tax period, and dates at issue.”

Erin M. Collins