In November 2025, an opinion on the Kwong case was handed down by the U.S. Court of Federal Claims. This opinion has wide applications to individual Hoosier taxpayers as well as Hoosier businesses. However, applicable taxpayers must move quickly and act on or before July 10, 2026, by filing a Protective Refund Claim to preserve their potential refund rights.
A note of caution is appropriate, as the Kwong decision may still be overturned. The IRS recently filed a Notice of Appeal on May 15, 2026. As the appeal will not be resolved before the July 10, 2026 deadline, taxpayers should act before this date to safeguard their right to a potential refund claim.
The opinion in the Kwong was based on the interpretation of IRC Section 7508A(d), which was enacted into law in 2019 to provide for the automatic postponement of certain filing and payment deadlines by reason of federally declared disasters. Because IRC Section 7508A(d) was in effect when the federal disaster declaration occurred in 2020, the code states that the period of automatic extension extends from “the earliest incident date specified in the declaration” to “the date which is 60 days after the latest incident date so specified.”
The COVID-19 pandemic disaster declaration was in effect from January 20, 2020, through May 11, 2023, but with this 60-day extension now applied under this decision, the deadline was extended to July 10, 2023. Thus, interest and penalties assessed by the IRS during that timeframe may be refundable, as the accrual of penalties and interest should have been suspended during that period. The three-year statute of limitations expires on July 10, 2026, if the Kwong decision is upheld. Thus, taxpayers who hope to have interest and/or penalties incurred during that timeframe refunded should file a Protective Refund Claim on or before July 10, 2026.
The IRS relied on its interpretation of Regulation Section 301.7508A-1(g)(3)(ii), which established an upper limit of one year for the postponement period. The court disagreed. Relying on the Supreme Court’s decision in Loper Bright, the court interpreted the plain language of IRC Section 7508A(d), and the court held that the express language of the statute was clear. The automatic extension lasted until 60 days after the end of the disaster declaration.
National Taxpayer Advocate (NTA) Erin Collins has published a three-part blog series that outlines what taxpayers should do now to preserve their claim. It is very informative and can be found here: Tens of Millions of Taxpayers May Be Eligible for Refunds – Act by July 10.
A fourth blog was recently written and updated by the NTA and can be found here: Beyond Penalties and Interest: How Kwong May Affect Missed Tax Refunds (Part IV). In addition to interest and penalty refunds, this recent blog suggests the Kwong decision may impact other deadlines, such as taxpayers that were due refunds or have unused credits from those previously closed tax years may be able to file for a refund. The refund claim or amended return, whichever is proper, must also be filed by July 10, 2026.
We recommend taxpayers review returns filed from tax years 2019–22 to determine whether they incurred interest and penalties during this approximate 3 ½ year period, which runs from January 20, 2020, to July 10, 2023. Other tax years may apply if your business files on a fiscal year or if you had interest and penalties incurred during that timeframe related to another tax year. If you do not have good internal records, you can set up an IRS account online to access your Account Transcript for prior years to review and assess any interest and penalties charged. The blog from the Taxpayer Advocate can be helpful in understanding your Account Transcript, or you can work with an advisor to obtain and review the transcript.
Taxpayers can file a Protective Refund Claim using Form 843 and attach documentation to support the claim. This will apply to most refund claims. Once filed, taxpayers must wait until a decision is made on the IRS appeal that was filed to evaluate next steps.
