Taxpayers who paid penalties or interest on tax filings during the COVID-19 emergency may be eligible for refunds, but must file a claim by July 10. The refunds stem from a federal court ruling, Kwong v. United States, which determined that the IRS's COVID-era deadline extensions may have affected the timeline for charging certain penalties and interest.
Eligibility requirements include having filed a return during the COVID-19 disaster relief period (January 20, 2020, through July 10, 2023) and being assessed penalties or interest, or having paid or still owing such penalties. The claim can also apply to those who missed out on refunds, refundable credits, withholding credits, estimated tax payment credits, or other tax benefits for tax years affected by the COVID-19 period, potentially including tax years 2019 through 2022.
Experts suggest that the potential refund amounts could be substantial, with one accounting professor noting that millions of people might be affected annually. To receive any potential refund, taxpayers must formally file a claim. The IRS may approve, deny, or not respond to claims. If a claim is approved, a taxpayer's balance may be reduced, or they could receive a refund if payment has already been made.
Those whose claims are denied have the option to protest or file a refund suit. If the IRS does not respond to a claim within six months, the Kwong ruling supports the possibility of legal action. However, failure to file a claim by the July 10 deadline will result in the forfeiture of the right to seek these refunds.
To preserve their rights, individuals and businesses can file a "protective claim" with the IRS. This measure ensures that a claim remains valid even if legal proceedings are prolonged. Taxpayers can find guidance and information on claiming these refunds through various law firms, including covidtaxrefunds.com. Additionally, as of July 1, the IRS introduced an online option for filing Form 843 electronically through its website, accessible to those with an IRS online account.
Alternatively, paper forms can be submitted by mail to the Internal Revenue Service, 1973 N Rulon White Blvd., Ogden, UT 84201. Submissions by mail must be identified as related to "Kwong vs. United States" by writing this phrase across the top of the form. It is advisable for individuals to review their specific circumstances and consider seeking professional tax guidance.