Quick Answer: Kwong v. United States held that COVID-19 disaster relief postponed federal tax deadlines from January 20, 2020, through July 10, 2023, which could wipe out many penalties and interest from that period. The government appealed, and on September 16, 2026, it asked the Federal Circuit to reverse. Nothing is final, and no refunds are automatic.
If you were charged IRS penalties or interest for 2019 through 2022, you may have heard that a court case could get that money back. That case is Kwong v. United States, and it is now on appeal. The deadline most taxpayers needed to protect a refund passed on July 10, 2026, which has left many people wondering where they stand. Here is what the Kwong appeal means for COVID-era penalties in plain terms.
What Did the Court Decide in Kwong v. United States?
In Kwong v. United States, 179 Fed. Cl. 382 (2025), the U.S. Court of Federal Claims interpreted IRC §7508A(d), which automatically postpones tax deadlines during a federally declared disaster plus 60 days. The COVID-19 disaster declaration ran from January 20, 2020, through May 11, 2023. Adding 60 days, the court treated federal tax deadlines as postponed until July 10, 2023.
Why Does Kwong Matter for IRS Penalties and Interest?
If deadlines were postponed until July 10, 2023, then returns and payments due during that window were not late until after that date. Under that reasoning, the National Taxpayer Advocate wrote in April 2026, tens of millions of taxpayers may be entitled to refunds or abatements of failure-to-file, failure-to-pay, and estimated tax penalties, plus related interest. The IRS disagrees with that reading, and relief is not automatic.
What Did the Government Argue in Its September 2026 Appeal Brief?
The Department of Justice filed a notice of appeal in May 2026 and its opening brief at the U.S. Court of Appeals for the Federal Circuit on September 16, 2026, according to AICPA’s The Tax Adviser. The government argued the postponement should be measured from a single “incident date,” January 20, 2020, so it ended 60 days later, on March 20, 2020. It also argued, in the alternative, for a May 21, 2020 end date or a one-year cap.
What the Court Held vs. What the Government Wants
| Issue | Court of Federal Claims (Kwong) | Government’s Appeal Position |
| Start of COVID postponement | January 20, 2020 | January 20, 2020 |
| End of postponement | July 10, 2023 (disaster end May 11, 2023 + 60 days) | March 20, 2020 (60 days after the incident date) |
| Alternative positions | Not applicable | May 21, 2020, or no more than one year |
| Effect on 2020–2023 penalties | Many timing penalties and interest may not have been owed | Penalties and interest generally stand |
| Status as of October 2026 | Decided, now on appeal | Briefing underway at the Federal Circuit |
The July 10, 2026 Deadline Has Passed. What Does That Mean?
For most taxpayers, July 10, 2026 was the last day to file a refund claim on Form 843 for COVID-era penalties and interest already paid, according to the Taxpayer Advocate Service. That date came from the three-year refund window counted from July 10, 2023. Taxpayers who filed protective claims have their claims held while the appeal plays out. Taxpayers with open examinations, Appeals cases, or litigation for those years may still have open time limits.
What If I Still Owe Penalties From 2020 Through 2023?
Unpaid balances are treated differently from paid ones. The National Taxpayer Advocate wrote that if Kwong holds, taxpayers should be entitled to abatements of penalties or interest not yet paid, and that protective claims for abatement can also be filed. How the courts will treat unpaid amounts after July 10, 2026, is not settled, so the right move depends on the dates on your IRS account transcript.
What About Debts From Before 2020?
Penalties on debts that were already late before January 20, 2020, are the most uncertain category. A Treasury regulation, Treas. Reg. §301.7508A-1(f), Example 4, says a taxpayer already delinquent before the disaster does not get pre-disaster penalties and interest erased. The National Taxpayer Advocate noted that a court could still reach a different result, because the Kwong opinion did not address pre-disaster delinquencies.
Kwong Isn’t the Only Way to Reduce Penalties
Kwong may take years to resolve, but other penalty relief exists today. First-Time Abate (FTA) can remove failure-to-file, failure-to-pay, and failure-to-deposit penalties if you had no penalties in the prior three years. Reasonable-cause relief is also available. Your 10-year Collection Statute Expiration Date (CSED) under IRC §6502 keeps running too, which is why strategy should start from your transcript, not the headlines.
A Situation We See Often
Illustrative example based on common case patterns; details are changed and combined. A small-business owner who still owed about $40,000, including 2020 and 2021 penalties and interest, assumed Kwong meant he could stop paying. It doesn’t. We reviewed his transcripts, identified which penalties fell inside the disaster window, requested First-Time Abate on the year that qualified now, and kept his installment agreement current so a default wouldn’t reopen levy risk while the appeal continues.
Frequently Asked Questions
Q: Can I still get a refund of COVID-era IRS penalties under Kwong?
A: Only if your right to a refund was preserved. For most taxpayers, the deadline to file a refund or protective claim on Form 843 was July 10, 2026. Taxpayers with open examinations, Appeals cases, or litigation for those years may still have time, so check your transcript with a professional.
Q: Is the Kwong decision final?
A: No. The government appealed to the U.S. Court of Appeals for the Federal Circuit and filed its opening brief on September 16, 2026. The appeals court could affirm, narrow, or reverse the decision, and that process may take years.
Q: What tax years does the Kwong case affect?
A: The decision concerns deadlines that fell between January 20, 2020, and July 10, 2023. In practice, that mostly involves penalties and interest on tax years 2019 through 2022.
Q: Should I stop paying the IRS because of Kwong?
A: No. Kwong is on appeal and does not change what the IRS is collecting today. Stopping payments can default an installment agreement and restart enforcement like levies.
Q: How do I know if my penalties fall inside the COVID disaster period?
A: Your IRS account transcript lists each penalty and interest charge with its date. Comparing those dates to the January 20, 2020, to July 10, 2023, window shows which charges could be affected if Kwong is upheld.
The Kwong appeal could take years, but interest on your balance is running at 7% right now, and other penalty relief like First-Time Abate is available today. M.A. Rubin CPA, PLLC, based in Tampa and serving taxpayers nationwide, pulls your transcripts, identifies which charges fall inside the COVID window, and builds a plan that doesn’t depend on the outcome of one appeal. Call (833) 627-8246 or visit RubinTaxRelief.com for a free case evaluation.
Disclaimer: This blog post is for informational purposes only and does not constitute legal or tax advice. Consult with a qualified professional for specific advice regarding your business.
Sources:
Sources: Taxpayer Advocate Service — “Tens of Millions of Taxpayers May Be Eligible for Significant Tax Refunds – If They Act on or before July 10 (Part I),” April 30, 2026; *Kwong v. United States*, 179 Fed. Cl. 382 (2025); The Tax Adviser — “Government says Kwong court misread COVID tax relief law,” September 16, 2026; IRS.gov — About Form 843.
