The National Taxpayer Advocate, the IRS’s own internal watchdog, is sounding an alarm that tens of millions of Americans may be eligible for refunds or reductions of tax penalties and interest from the COVID-19 disaster period, but most have no idea the money exists and almost none of them will act in time to claim it.
The deadline is July 10, 2026, approximately two months away. After that date, for most taxpayers, the window closes permanently.
The warning was issued on April 30 by Erin M. Collins, who leads the Taxpayer Advocate Service, an independent organization within the IRS that works on behalf of taxpayers rather than the agency itself.
Collins called this a “major refund opportunity” and said her overriding goal is to get the word out before the deadline passes for the vast majority of people who have no tax attorney watching these developments for them.
“My overriding goal is to get the word out to as many taxpayers as possible and to avoid disparate results between the ‘well advised’ and the ‘unaware,'” Collins wrote.
Here is what you need to know, whether you qualify, and exactly what to do before July 10.
What Created This Refund Opportunity?
The story begins with a court case that most Americans have never heard of and that even most tax professionals were not watching closely.
In November 2025, Judge Molly Silfen of the United States Court of Federal Claims issued a ruling in Kwong v. United States that has sweeping implications for anyone who paid tax penalties or interest during the pandemic years.
The ruling involved a specific section of the tax code, IRC Section 7508A(d), that governs how federal disaster declarations affect tax deadlines.
The provision says that during a declared federal disaster, filing and payment deadlines are automatically postponed for the duration of the disaster plus 60 days. COVID-19 was declared a federal disaster on January 20, 2020.
That declaration remained in effect until May 11, 2023, a span of approximately three and a half years. Add the 60-day extension and the postponement period runs through July 10, 2023.
The court’s logical conclusion from reading the statute plainly is significant. If deadlines were automatically postponed through July 10, 2023, then any tax return filed or any tax payment made during that entire window was not legally late.
If it was not legally late, the IRS had no legal basis to assess penalties for failure to file or failure to pay during that period. If it had no basis to assess those penalties, every taxpayer who was charged them, and who paid them, may be owed a refund.
A supporting ruling from the Tax Court in Abdo v. Commissioner, decided in 2024, reached similar conclusions, strengthening the legal foundation for refund claims.
“Because of the infrequency of a disaster lasting this long, most taxpayers, even most tax professionals, did not foresee that filing deadlines and payment deadlines would be postponed for this long and that return filings and payments during the federal disaster period would not be considered late and therefore not subject to penalties and interest,” Collins wrote. “But that is the logical extension of what the court ruled.”
Who Will Be Eligible?
The population of potentially affected taxpayers is not a small or niche group.
It includes individuals, small business owners, large corporations, estates and trusts, essentially anyone who was assessed a penalty or interest by the IRS during the COVID disaster period.
Specifically, you may be eligible if you were assessed any of the following during the period from January 20, 2020 through July 10, 2023:
-Penalties for failing to file your tax return on time
-Penalties for failing to pay taxes owed on time
-Penalties for failing to make estimated tax payments on time.
-Interest that began accruing earlier than it should have, or that accrued at all during a period when it legally should not have.
-Certain overpayment interest during the same period.
The scale of this potential eligibility is significant. In fiscal year 2022 alone, just one year of the three-and-a-half-year disaster period, the IRS levied more than 12 million estimated-tax penalties and more than 16 million failure-to-pay penalties, totaling more than $12 billion.
Not every one of those penalties falls within the scope of the Kwong ruling. But the number of taxpayers who were assessed qualifying penalties during the full pandemic period is, by any measure, enormous.
Major corporations have already begun acting. Meta and Western Digital are among the large companies that have filed claims under this ruling.
The well-represented, well-advised end of the taxpayer population is moving.
The National Taxpayer Advocate’s concern is that the tens of millions of individual taxpayers and small business owners who do not have tax attorneys monitoring federal court decisions will miss the window entirely.
What Does The IRS Say About The Kwong Ruling?
The IRS does not agree with the Kwong ruling. The agency’s position is that Section 7508A(d)’s automatic postponement provision requires a defined end date to trigger, without that defined date, the IRS argues, the automatic postponement did not apply to COVID’s unusually long disaster period.
The Department of Justice is expected to appeal the Kwong decision to the Federal Circuit.
That appeal means the law in this area is currently unsettled, the court of appeals may uphold the ruling, overturn it, or send it back for further proceedings.
If the government wins on appeal, claims filed under Kwong will be denied.
But here is the critical point that makes the July 10 deadline matter regardless of how confident you are in the ruling, the deadline to file a claim runs out whether the law is certain or not.
If you wait for the litigation to resolve before deciding whether to file, you will almost certainly miss the window.
The only way to preserve your right to a refund, even contingently, even while the law remains uncertain, is to file by July 10.
How Do You File?
The IRS will not issue these refunds automatically. It will not contact you to let you know you may be owed money.
The burden is entirely on the individual taxpayer to identify the eligibility, complete the form and mail it to the appropriate IRS address before the deadline.
The form is Form 843, officially titled “Claim for Refund and Request for Abatement.” This is the standard form for claiming a refund of taxes, penalties or interest that were incorrectly assessed.
There is no electronic filing option for Form 843 in this context. The claim must be submitted on paper by mail. The IRS does not issue a receipt for paper filings, which means there is no automatic confirmation that your claim was received.
For this reason, National Taxpayer Advocate Collins specifically recommends sending Form 843 via certified mail, which provides a postmarked receipt and tracking confirmation that establishes a clear paper trail if any dispute arises about whether the claim was timely filed.
The statute of limitations for claiming a refund is generally three years from the date you filed the tax return, or two years from the date you paid the tax, whichever is later.
For most taxpayers whose returns and payments fall within the COVID disaster window, these time limits produce a July 10, 2026 deadline.
Taxpayers who are uncertain about their exact eligibility or the precise amount of refund they may be owed have an additional option: a protective claim.
A protective claim allows you to preserve your right to a refund while the legal outcome remains uncertain, without requiring you to state a specific dollar amount.
It functions as a placeholder, locking in your claim before the statute of limitations expires so that if the Kwong ruling is upheld, your claim is already on file.
Protective claims must also generally be filed by July 10, 2026.
If you have a current examination, an open Appeals proceeding or ongoing litigation with the IRS for any year within the relevant period, your statute of limitations may still be open, giving you additional time. Consult a tax professional for the specifics of your situation.
What Is The National Taxpayer Advocate Asking For?
Collins is not simply warning taxpayers, she is also formally requesting that the IRS and Congress take action to make this process more accessible and less dependent on individual taxpayers knowing the law.
She has asked the IRS to publicly advertise the issue to all affected taxpayers rather than leaving the burden of discovery entirely on individuals.
She has asked that the July 10 deadline be extended by six months to give more people time to learn about the opportunity and file.
She has asked the IRS to consider blanket relief, automatically issuing refunds to all eligible taxpayers rather than requiring each person to file individually.
Collins has asked the IRS to build an electronic filing portal for this specific claim so that paper mail is not the only option.
None of those requests have been acted on yet. The deadline remains July 10. The form remains paper-only.
“The bottom line,” Collins wrote, “You may be entitled to a refund or reduction of assessed penalties and interest. For taxpayers dealing with financial pressures, these amounts can make a real difference.”
What Happens After You File?
If you file Form 843 before July 10 and the Kwong ruling is ultimately upheld, the IRS will owe you the penalties and interest you were assessed during the COVID disaster period.
If the government wins its appeal and the Kwong ruling is overturned, your claim will be denied, but you will have lost nothing by filing.
If Congress acts to provide automatic relief to all affected taxpayers, individual claims may become unnecessary, but that action has not occurred and cannot be counted on before the deadline.
Filing now preserves your options regardless of how the legislative or judicial outcomes develop.
Collins’ message to the tens of millions of taxpayers who may be eligible is simple. You may be owed money. The IRS is not going to tell you. The only way to find out and claim what you may be owed is to act before July 10, 2026.
