IRS refunds from COVID era may be owed to tens of millions: taxpayer advocate

WASHINGTON - The IRS’ taxpayer advocate says tens of millions of Americans may qualify for refunds or reduced penalties and interest because filing deadlines were postponed during the COVID‑19 emergency declaration.

What we know:

In a notice last month, the National Taxpayer Advocate said refunds or abatements may be available for penalties and interest the IRS assessed during the 3½‑year disaster declaration period, reported FOX Business.

The office said the issue is linked to the recent court rulings, including the Kwong decision, which found that federal disaster declaration rules postponed filing and payment deadlines from Jan. 20, 2020, through May 11, 2023.

The Justice Department may appeal, the advocate said, but any relief is not automatic. Affected taxpayers must file refund claims by July 10, 2026.

U.S. Commerce Secretary Howard Lutnick doubled down on President Donald Trump's plan to abolish the IRS. (Kayla Bartkowski/Getty Images)

The National Taxpayer Advocate wrote that because disasters rarely last this long, most taxpayers, and even many tax professionals, did not anticipate that filing and payment deadlines would be postponed for the entire period, leaving returns and payments from those years not technically late and therefore not subject to penalties or interest.

The office warned that without action from the IRS or Congress to ensure all affected taxpayers receive what they’re owed, those seeking refunds face a fast‑approaching deadline to file their claims.

"Unless the IRS or Congress acts to ensure all affected taxpayers will receive refunds if the Kwong decision is upheld, taxpayers seeking refunds for penalties and interest they paid relating to that period will, in most cases, need to file claims by July 10, 2026," the advocate said.

Big picture view:

They said their main goal is to make sure taxpayers understand the issue so those who are well advised don’t end up with an advantage over those who aren’t aware.

The taxpayer advocate said affected taxpayers may be eligible for refunds or abatements on amounts the IRS assessed during the COVID period.

That includes penalties for failing to file returns on time, failing to pay taxes, or failing to make estimated payments.

It also covers interest that began accruing earlier than it should have, as well as overpayment interest tied to the 2020–2023 disaster period.

The advocate warned that Form 843 refund claims must be submitted on paper, and because the IRS does not provide immediate confirmation of receipt, taxpayers are urged to send claims by certified mail to document timely filing if forms are lost.

The taxpayer advocate also said the IRS should follow the Taxpayer Bill of Rights and take four steps: publicize the issue for taxpayers, grant a six‑month extension for refund claims, consider providing relief systemically to all eligible taxpayers so they don’t have to file individually, and create an electronic submission portal.

The office also urged tax professionals to alert clients and encouraged members of Congress to raise the issue with constituents. They also called on the media to help inform the public.

What You May Need to Do

• Most taxpayers must file Form 843 refund claims by July 10, 2026, because the IRS generally won’t issue refunds or abatements without a timely claim.
• Taxpayers should consider filing protective claims while the issue continues to be litigated.
• Those in examinations, appeals or litigation may have open statutes and should evaluate how the Kwong issue affects their case strategy.

What Is a Protective Claim?

• A protective claim preserves your right to a refund while the law remains uncertain and doesn’t require calculating a specific dollar amount.
• Form 843 must identify the contingencies, describe the nature of the claim, and list the tax years involved, with "Protective Refund Claim Pursuant to Kwong Case" written at the top.
• The IRS typically holds protective claims until the courts resolve the issue, allowing taxpayers to finalize amounts later, a process that can take years.