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As further explained in our previous Insight, in Kwong v. United States, 179 Fed. Cl. 382 (2025), the court found that the COVID-19 disaster period automatically postponed certain federal tax deadlines through July 10, 2023—potentially freeing up millions of dollars in pandemic-era penalties and interest for refund.
That postponed date, which opened a three-year window for filing a claim for certain taxpayers, closed on July 10, 2026. Despite the closing of the aforementioned three-year window, at least two opportunities remain available for certain taxpayers to recover or reduce pandemic-era penalties and interest.
Refund and Abatement Opportunities Available to Taxpayers
Refund Claims for Amounts Paid Within the Last Two Years
A taxpayer must generally file a refund claim within three years of filing the original return or two years after paying the tax, whichever is later. Because this “two-year” rule is tied to the date of payment, this means a taxpayer may be eligible for a refund regardless of when the underlying tax liability was originally due.
A taxpayer who paid a pandemic-era penalty or interest charge within the last two years may still have a viable refund claim under this independent window, even though the three-year window for filing a claim under Kwong closed for certain taxpayers on July 10, 2026. Each payment should be reviewed on its own, since the applicable deadline depends on the specific date that amount was paid.
Abatement Requests for Unpaid Tax Liabilities
The July 10, 2026, deadline applied only to refund claims for certain pandemic-era penalties and interest already paid to the IRS and did not apply to unpaid tax liabilities. Because no payment has been made for an unpaid tax liability, there is no refund clock running against the taxpayer.
Taxpayers with unpaid tax liabilities (including for tax years pre-dating the COVID-19 disaster period) on which penalties and/or interest accrued from January 20, 2020, to July 10, 2023, should not assume they missed an opportunity to reduce or eliminate such liabilities simply because the three-year window for filing a claim under Kwong has passed.
Navigating Complex Refund and Abatement Procedures
Determining whether a specific payment still falls within the two-year window, or whether an unpaid balance may be abatable, depends on the dates and status of each account. Because Kwong remains on appeal, any claim filed now should also be structured to preserve the taxpayer’s position while the litigation is pending. Given these procedural nuances, taxpayers evaluating a remaining Kwong opportunity are well served by professional legal oversight to confirm eligibility and prepare a claim built to withstand IRS challenges.
Take Action: Confirm Whether You Still Qualify
Even though the broad Kwong refund window recently closed on July 10, 2026, taxpayers should not assume all opportunities are gone. Review your payment history for pandemic-era penalties or interest paid within the last two years, and check whether any assessed tax liabilities remain unpaid.
Don’t let an expired window for one type of claim prevent you from exploring other opportunities that could result in refunds or reduced tax liabilities. Act now before it is too late.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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