Additional Coverage:
WASHINGTON – Tens of millions of taxpayers who faced IRS penalties for late tax filings or payments during the COVID-19 pandemic may be eligible for refunds or the removal of those penalties. However, this relief is not automatic; most individuals must file a claim by July 10 to seek reimbursement or penalty abatement.
The National Taxpayer Advocate, an independent IRS oversight office, has issued a warning as the deadline approaches. This follows a federal court ruling late last year in the case of Kwong v.
U.S., which determined that COVID-19 emergency measures extended the tax filing deadlines, meaning penalties assessed for late filings during that time may have been improperly applied. The case remains ongoing.
Between January 2020 and July 11, 2023, the IRS imposed over 120 million penalties on taxpayers for late returns, unpaid taxes, or missed estimated payments. The advocate described this issue as widespread, affecting a broad range of taxpayers rather than a specific group.
Ken Kies, assistant secretary at the Treasury Department, expressed disagreement with the court’s ruling, stating that the previous administration believes the decision misinterprets the statute’s language and will continue to defend the existing law.
Tax professionals recommend taxpayers file a claim promptly to preserve their rights, regardless of how the case ultimately concludes. Alyssa Maloof Whatley, a director at Frost Law, emphasized the importance of filing to maintain eligibility for any potential refunds.
To apply, affected taxpayers-those who filed late, paid penalties, or had penalties assessed from Jan. 20, 2020, through July 11, 2023-should submit IRS Form 843 by mail to the appropriate IRS service center. The National Taxpayer Advocate suggests reviewing IRS tax account transcripts online to verify any penalties assessed during this period.
The advocate also highlighted that many impacted taxpayers have low to moderate incomes and may lack professional tax representation, increasing the risk they could miss out on claiming refunds.
With the July 10 deadline rapidly approaching, taxpayers are urged to act promptly to review their situations and submit claims if eligible.