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- Millions of Americans may receive a payout from the IRS as part of COVID era relief — key details (marketrealist.com)
COVID-Era Tax Relief: Millions May Be Eligible for IRS Refunds
Washington D.C. – Years after the initial shockwaves of the COVID-19 pandemic, a surprising wave of financial relief may be headed to millions of Americans. Due to a recent federal court ruling, the Internal Revenue Service (IRS) could be issuing significant refunds to taxpayers who faced penalties during the pandemic, recognizing the unprecedented health crisis as a “federally declared disaster.”
The provision at the heart of this potential payout is Section 7508A(d) of the tax code, which mandates the postponement of tax deadlines during a federally declared disaster, plus an additional 60 days. A federal court ruled last November that the COVID-19 pandemic, spanning from January 20, 2020, to May 11, 2023, indeed falls under this category. This decision effectively pushed the tax deadline for filings from tax years 2019, 2020, 2021, and 2022 to July 10, 2023.
Crucially, this means that any penalties levied by the IRS during this extended period were, in effect, unlawful. Individuals and businesses who were charged these penalties are now eligible for a refund.
While the IRS is expected to challenge this ruling, tax professionals are urging affected taxpayers to act swiftly. “Millions of taxpayers could be eligible, but if people don’t file claims before July 10, 2026, they lose out on the potential for a refund or abatement,” cautioned Jon Wasser, a partner at Fox Rothschild.
The financial implications could be substantial, particularly for businesses that struggled with liquidity during the pandemic and incurred “failure-to-pay” penalties. Jessica Marine, a partner at Frost Law, emphasized, “The potential dollar amounts could be significant, particularly for businesses that faced liquidity challenges during the pandemic and incurred substantial failure-to-pay (taxes) penalties.”
Many taxpayers may be unaware they are owed a refund. To determine eligibility, individuals and businesses should review their tax records for any penalties or interest charged during the specified pandemic period. To claim a refund, taxpayers can either engage a tax professional or utilize IRS Form 843 to request a refund and abatement, citing the relevant information from their tax records.
This development offers a glimmer of hope for those still recovering from the economic fallout of the pandemic, reminding us that even years later, relief can still be found in the unexpected corners of the tax code.