July 10 – A federal court ruling revived a COVID-era IRS tax question that could mean refunds or abatements for penalties and interest assessed during nearly 3½ years of the pandemic disaster period. The government is appealing, but taxpayers and businesses have until J
By the time July 10 arrives, the difference between chasing a COVID-era tax refund and walking away could come down to a single form and a signature.
A federal court decision revived a question about whether certain IRS penalties and interest assessed during the nearly 3½-year COVID-19 federal disaster period were improper. If the court’s reasoning holds. millions of Americans—including individuals and businesses—may be eligible for refunds or abatements tied to those amounts. But the stakes come with urgency: the government is appealing the ruling, and the clock is already running.
The deadline to file a claim is July 10. After that, taxpayers “forever lose their chance” at the money, according to guidance circulating from taxpayer advocates and law firms helping people evaluate whether they qualify.
The court case at the center of the issue is Kwong v. United States, decided last November. The ruling suggests that some penalties and interest assessed during the pandemic disaster period may have been improper—opening the door to refund claims or requests for abatements. Even with the appeal underway, the guidance is blunt: don’t wait for the appeal’s outcome.
That push to act quickly reflects a practical problem that hits right when people might be most cautious about taxes—timing. Law firm founders and advocates say it can take days, or even about a week, for their teams to receive IRS tax transcript information needed to evaluate eligibility.
“Time is critical for people considering filing a claim,” said Glen Frost, the founding partner of Frost Law. “Given the calendar and the mail-in requirement, this isn’t something to put off until the last minute.”
Frost warned that with July 10 approaching, it can still take “a week or so” for firms to receive IRS tax data to evaluate a potential claim.
To start, taxpayers need just enough access to their IRS records to confirm eligibility—then the rest can be handled by professionals or structured tools.
What people need to use the tools
Taxpayers generally only need to verify their identities and sign an IRS form allowing attorneys or accountants to view their IRS tax transcript. Once they review returns, those firms send a notification about whether a taxpayer may be eligible and how much they could receive.
Some firms now offer quick tools designed to shorten the process. Frost Law’s tool is described as free upfront to check eligibility. though it may require payment if someone ultimately decides to file a claim to protect their rights to a refund or abatement in the event the Kwong ruling survives appeal.
CovidTaxRefunds.com is another option mentioned in the guidance. It charges a flat fee to evaluate and prepare a penalty and interest refund claim.
Who could be eligible for a potential refund or abatement
Eligibility isn’t limited to a narrow group of taxpayers. Any taxpayer, including individuals, small businesses, large corporations, estates, and trusts, could be eligible if their tax situation intersects with the penalties and interest at issue.
The Independent National Taxpayer Advocate. Erin Collins. said the issue reaches taxpayers with obligations related to income. employment. estate. gift. and excise taxes. Collins also said it may affect taxpayers who filed late international information returns—sometimes triggering significant penalties even when no tax was due.
In her comments delivered through a blog, Collins framed the reach of the issue broadly: taxpayers with certain pandemic-period IRS obligations may be the ones looking at refunds or abatements linked to penalty and interest charges.
How much money is at stake
For many filers, the amount at stake is less about a small adjustment and more about whether substantial penalty-and-interest charges might be reversed.
Frost said billions of dollars of refunds are at stake, with amounts varying widely by taxpayer. He pointed especially to cases involving businesses and taxpayers with substantial failure-to-pay penalties.
A concrete example shows why the potential ranges can be large. In February, Western Digital sued the government, seeking a refund of a portion of $53.6 million it paid in taxes in August 2023 after resolving a tax dispute that stretched back to 2008.
Western Digital’s suit said it shouldn’t have been charged nearly $21 million in interest during the pandemic pause.
For taxpayers, that example underscores why the July 10 deadline matters even while the appeal is pending: the claim process is the only path to preserve eligibility.
Frost said people are “only eligible if they submit a claim before the July deadline.” He urged taxpayers to quickly check whether they qualify and to assess whether pursuing the claim is worth it.
Where the situation stands now
The government is appealing the Kwong v. United States decision, meaning a refund is not guaranteed. But the guidance steering taxpayers toward action does not hinge on the appeal outcome—it hinges on the deadline.
July 10 is now less than a month away. For anyone who might be caught in the policy shift raised by the Kwong ruling, waiting until the legal fight becomes clearer could cost the chance to try.
COVID refund IRS refund Kwong v. United States penalty and interest July 10 deadline IRS tax transcript taxpayer advocate Frost Law CovidTaxRefunds.com Western Digital lawsuit