Tens of millions of American taxpayers may be entitled to refunds or reduced penalties and interest after a court ruling tied to the COVID-19 emergency declaration, the National Taxpayer Advocate said Thursday. The warning centers on an irs covid refund deadline that could catch many people by surprise: July 10, 2026.
The National Taxpayer Advocate said the relief could cover penalties and interest the IRS assessed during the 3.5-year period from Jan. 20, 2020, through May 11, 2023, when filing and payment deadlines were postponed under the court's reading of federal disaster rules. The office said taxpayers who paid those charges and want money back will, in most cases, need to file claims on paper before the deadline, unless the IRS changes its process.
The matter stems from recent court decisions, including the Kwong case, which held that the tax code's treatment of federal disaster declarations postponed filing and payment deadlines throughout that entire period. That interpretation could open the door to refunds or abatements for millions of people who were assessed penalties or interest while the pandemic emergency declaration was still in effect.
But the relief is not automatic, and that is the trap. The Justice Department may appeal the ruling, and unless the IRS or Congress acts to make sure all affected taxpayers receive refunds if Kwong is upheld, many taxpayers will have to come forward on their own. The National Taxpayer Advocate said most people, and even most tax professionals, could not have anticipated that deadlines and payments would be pushed out for so long or that late-filed returns and payments would not be treated as late at all.
“At the risk of repetition, my overriding goal is to get the word out to as many taxpayers as possible and to avoid disparate results between the ‘well advised’ and the unaware,” the National Taxpayer Advocate said. The same office said taxpayers seeking refunds for penalties and interest tied to that period will, in most cases, need to file claims by July 10, 2026, if the ruling stands and no broader fix is put in place.
The practical question now is whether the IRS will create a smoother path for claims, or whether Congress will intervene before the deadline arrives. For taxpayers who were hit with charges during the pandemic period, the safest reading is simple: if they think they may be eligible, they cannot wait for the government to sort it out for them.
