Ruling on COVID Case Could Mean Tax Refunds for Millions

If you were hit with IRS penalties or interest during the COVID-19 years, you may be owed money back. But the government won't automatically send you a check. You have to ask for it — by the date.

The National Taxpayer Advocate (NTA), who oversees an independent watchdog office within the IRS, says tens of millions of Americans could be affected. If you filed your own taxes during the pandemic and paid a penalty or got hit with an interest charge, you may be in line for a refund.

Court ruling may lead to IRS payback?

The refunds arise from a federal court’s ruling, in a case called Kwong v. United States, that the COVID-19 pandemic counted as a federal disaster. Under Section 7580A of the tax code, that means the IRS was required to extend tax deadlines for the entire disaster period, which ran from Jan. 20, 2020, through May 11, 2023, plus 60 days.

As a result, the NTA said in a May 5 blog post, “tax returns and payments due anytime within that window were not late until after July 10, 2023,” and any penalties or interest the IRS charged you for late filings during that period may have been a mistake.

The IRS doesn’t agree, and the Department of Justice is expected to appeal the ruling on the tax agency’s behalf. But if you believe you are due a refund, don’t wait for the court fight to play out: You would likely miss the July 10, 2026, deadline and permanently lose your right to a refund, even if the court eventually rules in taxpayers’ favor.

How you might qualify

Check your tax records to see if any of the following happened between Jan. 20, 2020, and July 11, 2023:

• You filed a federal tax return late.
• You paid a penalty for filing or paying late.
• You made estimated tax payments late.
• You were charged interest by the IRS.
• You still owe IRS penalties from that period, even if you never paid them.
• You filed a late international information return.

Start by requesting a copy of your tax account transcript from the IRS. This document shows everything that happened on your tax account in a given year: when you filed, what you paid, what the IRS charged you and whether you got any refunds.

You do not need to understand every line on it. You are looking for just three things:

• A penalty or interest charge.
• The date next to that charge.
• Whether that date falls between Jan. 20, 2020, and July 11, 2023.