A recent federal court case may open the door for some taxpayers to recover IRS penalties and interest from the COVID-19 period—but time may be limited to act.
What You Need to Know About Kwong v. United States
During the COVID-19 pandemic, the federal government issued emergency declarations that postponed certain tax deadlines. However, how those extensions apply to penalties and interest has been unclear.
In a recent case, Kwong v. United States, a federal court ruled in a way that could allow some taxpayers to challenge penalties and interest assessed during that time. While this is still an evolving area of law, it creates a potential opportunity for refunds or relief.
Why This Matters to You
If you paid IRS penalties or interest related to tax filings or payments during the COVID-19 period—or still have outstanding amounts—you may be eligible to:
- Request a refund of penalties and interest already paid
- Seek abatement (removal) of penalties and interest still owed
This could apply to a wide range of taxpayers, including individuals, businesses, trusts, and estates.
What Types of Penalties May Qualify
Based on current guidance, the following items are worth reviewing:
- Failure-to-file penalties
- Failure-to-pay penalties
- Certain estimated tax penalties and related interest
Even if you’re unsure whether this applies to you, it’s worth a review—many taxpayers assume they don’t qualify when they actually might.
Important Deadlines
Timing is critical.
- July 10, 2026, may be a key deadline to preserve your ability to claim a refund or request relief
- In some cases, deadlines could be even earlier depending on your specific situation
- The IRS will not automatically issue refunds—you must take action
Because this area is still developing, future IRS guidance or additional court decisions could impact eligibility.
How We Can Help
Our team is actively monitoring this issue and evaluating how it may apply to our clients. We can:
- Review your prior filings and payments
- Determine whether you may be eligible for relief
- Prepare and file protective claims or refund requests
- Help ensure you don’t miss critical deadlines
Take the Next Step
If you paid penalties or interest during the COVID-19 period, we recommend reviewing your situation as soon as possible.
Contact our office today
Oregon: 503-362-9152
Arizona: 480-407-4488
