Key Takeaways
- A new court ruling may allow taxpayers who paid IRS interest or penalties during the COVID-19 pandemic to claim refunds.
- The Kwong v. United States decision holds federal tax deadlines were automatically suspended during the COVID-19 national disaster period.
- The IRS lacks authority to assess certain interest and penalties that accrued between January 20, 2020, and July 10, 2023.
If you paid IRS interest or penalties during the pandemic, you may have an opportunity to recover those amounts.
A recent federal court decision, Kwong v. United States, held that Internal Revenue Code Section 7508A automatically suspended federal tax deadlines during the COVID-19 national disaster period.
Because those deadlines were legally postponed from January 20, 2020, through July 10, 2023, the court found that the IRS lacked authority to assess certain interest and failure to file or failure to pay penalties that accrued during that time.
This ruling may allow refunds or abatements of interest and penalties already paid. However, refund claims are subject to strict time limits, and the statute of limitations may be closing.
Given the strict statute of limitations for filing refund claims, taxpayers who, within the last two years, paid interest or penalties that accrued during the postponement period should act quickly by reaching out to your tax representative.
Additionally, taxpayers who accrued penalties or interest during the postponement period, but who have not paid them, have an opportunity to seek abatement. Our team can help evaluate eligibility and take timely action to preserve potential refund claims.
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