The Kwong Ruling: How to Get Your COVID Tax Penalties Refunded
By The Black Inc Tax Services Team
There is a major tax opportunity that could allow eligible taxpayers and business owners to recover IRS penalties and interest paid during the COVID-19 pandemic.
If the IRS charged you penalties or interest between January 2020 and July 2023, you may be entitled to a refund under the landmark Kwong v. United States court decision.
However, there is one important catch: the IRS will not automatically send you a refund.
Here’s what you need to know.
What Is the Kwong Ruling?
In late 2025, a federal court issued an important decision in Kwong v. United States.
The court determined that the federal COVID-19 disaster declaration automatically postponed certain federal tax deadlines during the pandemic.
If those deadlines were legally postponed, many penalties and interest assessments calculated using the original due dates may have been improperly assessed.
This means taxpayers who paid those penalties could potentially recover that money.
Why Isn’t the IRS Automatically Refunding Taxpayers?
The IRS has not agreed with the ruling and is expected to continue challenging it through the appeals process.
Because of this uncertainty, taxpayers who believe they qualify should consider filing a Protective Claim for Refund to preserve their legal rights while the litigation continues.
Waiting could permanently eliminate your ability to claim a refund if the filing deadline passes.
The Filing Deadline
Time is critical.
The deadline for filing a protective claim related to the Kwong ruling is:
July 10, 2026
Missing this deadline may permanently prevent you from requesting a refund, even if future court decisions ultimately favor taxpayers.
Who May Qualify?
You may be eligible if you:
- Owed federal taxes for 2019, 2020, 2021, or 2022.
- Paid IRS late-filing penalties.
- Paid IRS late-payment penalties.
- Paid IRS underpayment interest.
- Had an IRS installment agreement during the pandemic period.
Business owners, self-employed individuals, and taxpayers making quarterly estimated tax payments may have the greatest potential refund opportunities.
How Do You File a Protective Claim?
The refund process is considerably more complicated than filing an ordinary tax return.
It generally requires:
- Obtaining IRS Account Transcripts.
- Reviewing IRS transaction codes.
- Determining which penalties qualify.
- Calculating potential refund amounts.
- Completing IRS Form 843.
- Preparing a properly documented protective claim.
- Mailing the claim according to IRS requirements before the deadline.
Errors may delay or jeopardize your claim.
Why Many Taxpayers Choose Professional Help
Protective claims involve technical IRS procedures and legal arguments.
Because the IRS may initially deny many claims while litigation continues, it is important that your filing preserves all available legal rights.
A properly prepared filing today may protect your ability to recover money later if the courts ultimately uphold the Kwong decision.
How Black Inc Tax Services Can Help
Our team can:
- Review your IRS account transcripts.
- Determine whether you may qualify.
- Calculate potential refund amounts.
- Prepare IRS Form 843.
- File your protective claim correctly before the deadline.
- Monitor your case throughout the appeals process.
If you believe you paid significant IRS penalties during the COVID-19 period, don’t wait until it’s too late.
Contact Black Inc Tax Services today to determine whether you qualify for a potential refund.
Frequently Asked Questions
What is a Protective Claim?
A Protective Claim preserves your right to request a refund while a legal issue is still being decided by the courts.
Will the IRS automatically send me a refund?
No. Taxpayers generally must submit a protective claim to preserve their refund rights.
Which tax years could qualify?
Many claims involve tax years 2019 through 2022, depending on when penalties and interest were assessed.
What IRS form is used?
Most taxpayers file IRS Form 843 (Claim for Refund and Request for Abatement).
Should business owners check this too?
Yes. Business owners and self-employed taxpayers often paid significant penalties during the pandemic and may have larger refund opportunities.
Call to Action
Think you overpaid IRS penalties during COVID?
Our tax professionals can review your IRS transcripts and determine whether you may qualify under the Kwong ruling.
Schedule your consultation with Black Inc Tax Services today before the filing deadline passes.