If you paid IRS penalties or underpayment interest anytime between 2020 and 2023, two federal court rulings may be worth your attention. Together, Abdo v. Commissioner and Kwong v. United States found that the IRS may have lacked the legal authority to assess certain penalties and interest during the COVID-19 disaster period. If the rulings hold, taxpayers who have already paid those charges may be entitled to a refund, while those who still owe them may be entitled to an abatement instead.
The window to act on either outcome is closing, regardless of how the underlying legal fight eventually turns out.
Two Rulings, One Theory
Abdo v. Commissioner came first. In April 2024, the U.S. Tax Court held that Internal Revenue Code Section 7508A(d) automatically extended the deadline to file a Tax Court petition during the pandemic, and that the IRS's own regulations could not narrow a postponement that Congress had written as mandatory. Abdo answered a narrower question than Kwong eventually would, but it laid the groundwork for the larger ruling that followed.
In November 2025, the U.S. Court of Federal Claims went further. In Kwong, the court ruled that the same statute mandated an automatic postponement of federal tax filing and payment deadlines for the entire length of the COVID-19 disaster period, not just the first sixty days the IRS had administratively recognized at the time. That period ran from January 20, 2020, through May 11, 2023, with a sixty-day extension carrying the postponed deadline through July 10, 2023.
Taken together, the two decisions reject the IRS's narrower reading that capped pandemic relief at one year. If that view holds, returns filed or payments made anywhere inside that more-than-three-year window may not have been legally late, even though the IRS treated them as late at the time.
Why Courts Sided With Taxpayers
Part of what makes Kwong notable is the reasoning behind it, not just the outcome. The IRS had issued a regulation stating that the automatic postponement period could never exceed one year, and for years, that kind of agency interpretation would have received significant deference from the courts simply because the IRS issued it.
That changed with the Supreme Court's 2024 decision in Loper Bright Enterprises v. Raimondo, which ended the longstanding practice of courts deferring to an agency's own reading of an ambiguous statute. Without that deference, the Court of Federal Claims was free to read Section 7508A(d) on its own terms, and it found nothing in the statute's text supporting the IRS's one-year cap. The government has appealed the ruling to the Federal Circuit, with its notice of appeal filed in May 2026, and the outcome there remains genuinely unresolved.
Who and What May Qualify
The rulings may affect taxpayers who filed a tax return late during the COVID-19 disaster period, who paid penalties or interest on those penalties for filing or paying late, or who still owe penalties and interest that were never paid. They may also affect taxpayers who filed an international information return late, a category that tends to catch people off guard since those penalties can run into tens of thousands of dollars even when no underlying tax is owed.
Eligibility isn't limited to individual filers. Business owners, individuals, nonprofits, trusts and estates, and clients represented by CPAs or financial advisors may all fall within scope, provided a penalty or interest charge accrued anywhere between January 20, 2020, and July 10, 2023. That holds true even if the underlying tax year predates 2020.
What a Refund Would Mean
It's worth being precise here, since the headlines tend to overstate certainty. If the rulings are ultimately upheld, taxpayers who already paid qualifying penalties or interest may be entitled to a refund of those amounts. Taxpayers who still owe penalties or interest that were never paid may instead be entitled to an abatement.
Neither outcome happens automatically. Filing a claim does not, by itself, produce a refund or an abatement. It preserves the right to pursue one while the underlying legal question continues working its way through the appeals process.
The Appeal Still Looms
The IRS is appealing the Kwong ruling, and there's no telling how the Federal Circuit will resolve it. A favorable decision at the Court of Federal Claims level doesn't bind every taxpayer in every part of the country, and the government has made clear it intends to keep fighting the underlying legal theory. Refund and abatement recovery isn't guaranteed under current law, and outcomes will depend on how the appeal develops and on each taxpayer's specific facts.
This is exactly why the deadline below matters as much as the legal analysis itself.
The July 10 Deadline
A protective refund claim is not a request for immediate payment. It's a filing that preserves a taxpayer's right to pursue a refund or abatement later, while the legal question remains unsettled. Filing one doesn't guarantee anything, but skipping it before the deadline passes may eliminate that option entirely if the rulings are ultimately upheld.
For most affected taxpayers, the relevant statute of limitations is calculated using the extended deadline the courts applied, which puts the window to file at July 10, 2026. Individual deadlines can vary depending on filing and payment history, so this general date shouldn't be assumed to apply automatically in every case.
For many taxpayers, the appeal's outcome matters less than simple timing. Whether they evaluated their eligibility while the option was still available to them will determine whether the appeal's outcome is even relevant to their own situation.
Checking Your Own Exposure
Most taxpayers will need to pull their IRS account transcripts to identify the specific penalty and interest assessments tied to their accounts. A transcript shows the dates and types of charges, allowing you to determine whether a given charge falls within the affected window.
The form used to file a protective claim is IRS Form 843. Taxpayers who don't yet know the exact dollar amount can still file, but the National Taxpayer Advocate has recommended writing "Protective Refund Claim Pursuant to Kwong Case" across the top of the form so the IRS can route it correctly while the litigation continues. Separate forms are generally required for each tax year, and for each tax type if a taxpayer was charged penalties or interest on more than one kind of tax.
This is also where the question of an official IRS program often comes up, and it's worth addressing directly. The IRS has not created a standalone COVID tax refund program, and it does not automatically identify or refund eligible taxpayers. Recovery depends entirely on the taxpayer filing a timely protective claim, since the underlying legal questions are still being litigated rather than settled into formal IRS policy.
Working With an Attorney
Evaluating a potential claim under Abdo and Kwong involves a transcript review, an analysis of which specific charges fall inside the disaster-period window, an assessment of whether filing makes sense given the individual facts, and the actual preparation and filing of the claim itself. For CPAs and financial advisors working through client files, the same evaluation applies at the client level, and many are currently flagging accounts that show penalty or interest charges within this window.
If you believe you, your business, or a client may have paid or been charged IRS penalties or underpayment interest during the COVID disaster period, Hall Lundstedt's dedicated Kwong refund claims page walks through eligibility in more detail and outlines how to request a review. Given the deadline involved, evaluating eligibility sooner rather than later is the more conservative path, regardless of how the appeal eventually resolves.
Frequently Asked Questions
What is the Kwong v. United States ruling?
In November 2025, the U.S. Court of Federal Claims held that federal tax deadlines were automatically postponed for the full length of the COVID-19 disaster period, from January 20, 2020, through July 10, 2023. That may mean penalties and interest charged during that window were assessed in error.
How does Abdo v. Commissioner relate to Kwong?
Abdo came first, in April 2024, and established that the same postponement statute automatically extended Tax Court filing deadlines during the pandemic. Kwong built on that reasoning and applied it more broadly to penalties and interest across the full disaster period.
Who may qualify for a refund or abatement?
Business owners, individuals, nonprofits, trusts and estates, and clients represented by CPAs or advisors may all qualify if they filed late, paid penalties or interest during the disaster period, or still owe penalties and interest that were never paid. Late international information returns may also be affected.
What is a protective refund claim?
A protective refund claim is a filing that preserves a taxpayer's right to pursue a refund or abatement later, while the legal question is still being litigated. It does not guarantee a refund, but skipping it before the deadline may eliminate that option permanently.
What is the deadline to file?
For most affected taxpayers, the deadline is July 10, 2026. Individual deadlines can vary depending on filing and payment history, so this date shouldn't be assumed to apply automatically in every case.
Is there an official IRS COVID-19 refund program?
No. The IRS has not created a standalone program, and it does not automatically identify or refund eligible taxpayers. Recovery depends on the taxpayer filing a timely protective claim using Form 843.
Is a refund guaranteed if I file a claim?
No. The IRS is appealing the Kwong ruling, and the outcome is unresolved. Filing a claim preserves the right to pursue a refund or abatement, but it does not guarantee one.