A recent decision from the U.S. Court of Federal Claims may create a protective refund-claim opportunity for some taxpayers.
In Kwong v. United States, the Court of Federal Claims held that, under the version of §7508A(d) applicable to the COVID-19 disaster declaration, the mandatory disaster postponement period began on January 20, 2020 and ended on July 10, 2023. The court applied that interpretation to hold that the taxpayer’s refund suit was timely. The decision is broader than the COVID relief the IRS announced during the pandemic, which generally postponed only specified filing, payment, refund-claim, and other time-sensitive deadlines for limited periods.
The United States has appealed the decision to the Federal Circuit. If the taxpayer-favorable interpretation is sustained, some taxpayers may have refund or abatement opportunities for penalties, additions to tax, or interest tied to filing, payment, refund-claim, refund-suit, installment-payment, or other covered deadlines during the affected period.
Who Should Review This?
Taxpayers should consider reviewing their records if they paid, were assessed, or requested abatement or refund of:
- Late-filing or late-payment penalties
- Certain estimated-tax penalties
- Interest connected with tax liabilities whose original filing or payment deadlines fell during the affected period, including potentially calendar-year 2019 through 2022 federal income tax liabilities
- Installment-agreement payments or other covered IRS payment obligations due during the affected period
- Amounts connected with refund claims or refund suits the IRS treated as untimely
This may also matter if the IRS denied a refund claim as untimely or if a taxpayer did not file a claim because the claim appeared to be outside the normal limitations period.
Timing Matters
Refund claims are subject to strict statute of limitations rules. Most taxpayers will need to file claims by July 10, 2026. Waiting for final court resolution may result in losing the opportunity.
Filing a protective claim may help preserve your ability to recover amounts while additional guidance and litigation continue. These claims are typically filed on Form 843 and must be submitted on paper, which adds an administrative layer and makes early action important.
How De Boer, Baumann & Company Can Help
Evaluating this opportunity requires a detailed, fact-specific review. Our team can help identify whether you are impacted, quantify potential refunds, and prepare claims within the required timeframes.
If you would like us to review your situation, please contact us to discuss next steps.
This article provides general tax and accounting insights and is not intended as advice specific to your organization or a substitute for personal consultation. We do not provide legal advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.