The IRS added an option on its mobile-friendly forms page allowing individual taxpayers to electronically file Form 843, Claim for Refund and Request for Abatement, for protective refund claims related to Kwong v. United States. The new online option is limited to individual taxpayers filing Form 843 electronically for Kwong-related claims involving fully paid penalties and interest. Business taxpayers must still file Form 843 on paper, and individuals who prefer not to use the online option may also file on paper.
Taxpayers seeking abatement of unpaid penalties or interest may still use Form 843, but the IRS’s new electronic filing option appears limited to claims involving amounts already paid.
To use the electronic filing option, taxpayers must have an IRS Online Account.
The timing matters because the IRS has appealed the Kwong decision. Protective refund claims are designed to preserve a taxpayer’s rights while a legal issue remains unresolved. If the government ultimately wins on appeal,
“There’s a narrow window for taxpayers who haven’t filed a claim yet,” Glen Frost of Frost Law Firm said in a news release. “This new electronic portal creates a shortcut for people to get their refund request in before the deadline. If people paid penalties or interest during the pandemic, this is a last-minute chance to quickly file a claim.”
National Taxpayer Advocate Erin Collins also flagged the deadline in a blog post, calling the result “not a fair result” for taxpayers who may ultimately be entitled to refunds but do not know they need to file now.
“When potential relief exists but taxpayers must know to ask for it, unrepresented taxpayers, low-income taxpayers, and taxpayers who cannot easily obtain transcripts or professional help are at special risk of losing refunds,” Collins wrote. “In fact, I suspect only a tiny fraction of potentially eligible taxpayers will file timely claims.”
(I completely agree with her take.)
What Are Kwong Refund Claims?
The refund opportunity comes from Kwong v. United States, a federal tax refund case decided by the U.S. Court of Federal Claims. The court held that certain tax deadlines were automatically postponed for the entire period that the COVID-19 pandemic was treated as a federally declared disaster—plus 60 days.
That interpretation could open the door for some taxpayers to seek recovery of certain IRS penalties and interest assessed during the COVID-19 disaster period. For most taxpayers, the protective claim deadline is July 10, 2026.
Background
The case was brought by Terry Kwong, an individual taxpayer in California. His case started well before the pandemic.
Kwong had received advice involving a loss carryforward related to a transaction that originated in 2005. Years later, the IRS reduced the amount of the loss. That adjustment resulted in the loss being used up in the 2005 and 2006 tax years.
Because Kwong had anticipated that the loss would be sufficient to cover future years’ taxes, he did not timely resolve his 2007, 2010, and 2011 tax liabilities. He also did not timely file his 2010 and 2011 federal income tax returns. As a result, he was assessed failure-to-file and failure-to-pay penalties for the 2007, 2010, and 2011 tax years.
Kwong later hired a new accountant and timely filed and paid his 2015 taxes. But the IRS transferred his entire payment to another tax year to satisfy the existing balance due and then assessed significant delinquency penalties. The same thing happened for the 2016 tax year.
When Kwong discovered what had happened, he met with the IRS and arranged to pay his 2007, 2010, 2011, 2015, and 2016 tax liabilities in full. Then, in 2020, he filed refund claims for penalties and interest for those years, arguing that he had acted with reasonable cause and in good faith.
The IRS disallowed his claims in September and October 2020.
Kwong filed a refund suit in 2023 in the United States Court of Federal Claims. Unlike federal district courts, which handle a broad range of civil and criminal matters, the Court of Federal Claims has nationwide jurisdiction over certain monetary claims, including federal tax refund suits.
Kwong’s Argument and Timing
Under section 6532 of the tax code, a taxpayer generally has two years from the date the IRS mails a notice of disallowance to file a refund suit in federal court. Kwong did not file his lawsuit until February 2023, more than two years after the IRS disallowed his claims. The government moved for summary judgment, arguing that the claims were untimely because Kwong waited too long.
Summary judgment is a judgment entered by a court for one party and against another before trial. In a civil case, it is triggered by a pretrial motion asking the court to rule because there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law.
Judge Meyers disagreed with the government. He ruled in favor of Kwong on the timeliness issue, finding that the suit could proceed.
The key issue was section 7508A of the tax code, which provides relief to taxpayers affected by federally declared disasters by postponing certain federal tax deadlines, including deadlines for filing returns and refund claims. The IRS pointed to its own COVID-19 relief notices, including Notice 2020-23, which extended certain deadlines by only a few months in 2020. The government also argued that section 7508A was discretionary, meaning the Treasury Secretary had authority to decide how far to extend deadlines.
Judge Meyers focused on Congress’s use of the word “shall,” which he read as mandatory rather than discretionary. Under that reading, the postponement applied automatically for the entire federally declared disaster period, plus 60 days. For COVID-19, the relevant federal disaster period began January 20, 2020, and ended May 11, 2023. Adding 60 days brings the date to July 10, 2023.
For Kwong, that meant the time to file his refund lawsuit had been paused, so his filing was not late.
What Kwong Did—And Did Not—Decide
Kwong was not a complete victory. Kwong actually didn’t recover everything he asked for. He ultimately recovered money for only one tax year, and he was not awarded costs or attorney’s fees. It’s a useful reminder that the ability to bring a claim is not the same thing as winning the full amount requested.
Filing a claim preserves the right to seek a refund if Kwong survives appeal and applies to the taxpayer’s facts, but it does not guarantee a win.
What About Abdo?
Kwong is getting most of the attention, but it was not the first case to consider how section 7508A applied during the pandemic. In Abdo v. Commissioner, the U.S. Tax Court reached a similar conclusion. The court found that, under section 7508A, an automatic postponement period applied, making the taxpayers’ petition timely.
Both Abdo and Kwong are significant because the courts looked closely at the statutory text rather than simply deferring to the IRS’s administrative guidance. That approach also fits, post-Loper Bright, where courts no longer defer to agency interpretations simply because a statute is ambiguous.
Congress Later Changed The Rule
Congress later amended section 7508A on November 15, 2021, changing the formula for disaster-related postponements going forward. The amended version generally results in much shorter postponement periods.
But in Kwong, Judge Meyers ruled that the 2021 change did not apply retroactively to the COVID-19 disaster period because the pandemic disaster declaration began before the law was changed.
What This Means For Taxpayers
Tax firms and taxpayers see an opportunity because Kwong interpreted section 7508A as automatically postponing certain federal tax deadlines for the full COVID-19 disaster period, plus 60 days. The argument is that some failure-to-file penalties, failure-to-pay penalties, and interest assessed during the affected period may not have been proper if the relevant legal deadlines were postponed. As a result, taxpayers who paid those amounts may seek a refund or abatement.
Why Protective Claims Matter
The Kwong decision is not final. The government has appealed, and the IRS has until July 20, 2026, to file its brief.
If the Federal Circuit reverses Kwong, refund claims based on the decision may be denied. But if the decision is upheld and you failed to file a timely claim, you may be out of luck. That is why it may make sense for some taxpayers to file protective refund claims now.
What’s Next for Taxpayers
If you’re not sure whether this applies to you, start by checking your transcript. Look for penalty codes such as 160 for failure to file and 166 for failure to pay during the relevant claims window. Also take a look at whether interest was assessed or paid in connection with those penalties or delayed payments.
If the amounts are significant, it may be worth talking to a reputable tax professional who can review the transcripts, evaluate the claim, and help decide whether filing Form 843 makes sense.
Just pay attention to those deadlines. The IRS’s new online option may make filing easier for some individuals, but it does not extend the deadline. For many taxpayers, July 10, 2026, is still the date that matters.
