IRS COVID penalty refunds: what Kwong could mean for 2019-2022 tax years
Business owners are paying attention to Kwong v. United States because it may affect IRS penalties and interest assessed during COVID-era tax years. The short version: some taxpayers who paid late-filing, late-payment, estimated-tax, or related interest charges may need to review whether a refund or protective claim is worth filing.
This is not automatic money, and it is not a guarantee. It is a deadline-driven review issue. If your IRS account includes penalties or interest tied to 2019, 2020, 2021, or 2022 tax obligations, the practical question is whether you should preserve your rights before the window closes.
Why July 10, 2026 matters
The National Taxpayer Advocate has warned that, under the reasoning in Kwong, many affected taxpayers may have until July 10, 2026 to file a refund claim or protective claim. The exact deadline can depend on the tax year, when the return was treated as due, and when penalties or interest were paid.
What the case is really about
During the COVID federal disaster period, certain tax deadlines were postponed. The core issue is whether the IRS should have treated some returns and payments as late when disaster relief timing may have pushed the operative deadline out to July 10, 2023.
If the return or payment was not actually late under that reasoning, then penalties and interest tied to the supposed lateness may deserve a second look. That is why taxpayers and tax professionals are discussing formal refund claims, protective refund claims, and abatement requests.
Who should review their account
- Individuals who paid IRS penalties or interest on 2019-2022 income tax returns.
- Business owners who had personal, business, payroll, or estimated-tax issues during the COVID years.
- Taxpayers with IRS notices showing failure-to-file, failure-to-pay, estimated-tax penalties, or interest charges.
- Anyone unsure whether penalties were paid, still open, adjusted, or removed.
Refund claim vs. protective claim vs. abatement
A refund claim asks the IRS to return money that has already been paid. A protective claim is used when you want to preserve a possible refund position while the legal issue, amount, or entitlement remains unresolved. An abatement request is different: it asks the IRS to remove or reduce an amount that has been assessed but not yet paid.
That distinction matters because the IRS has strict timing rules. Waiting for perfect clarity can be risky if the statute of limitations runs first.
What to gather before a review
- IRS notices showing penalties, interest, tax year, and account type.
- Account transcripts, if available.
- Payment history showing when penalties or interest were paid.
- Any previous penalty abatement letters, appeals, or IRS adjustments.
PMF LA next step
Start with a focused eligibility screen. The goal is to identify whether your IRS account deserves a deeper review before the deadline pressure gets worse.
Check eligibilityImportant caution
Refunds are not guaranteed. The IRS may contest claims, facts matter, and formal tax advice should come from an appropriately qualified tax professional. PMF LA helps organize the first look so you can decide whether the next step is worth pursuing.
Sources: National Taxpayer Advocate; PMF LA Tax Refund Review.