See if the IRS owes you a Covid-era tax refund — and what to do if you have tax debt
Tens of millions of taxpayers hit with IRS penalties or late fees may be eligible for a refund, thanks to a recent federal court ruling. But the time to act is quickly drawing to a close.
In November 2025, the U.S. Court of Federal Claims ruled in Kwong v. United States that certain tax deadlines should have been paused during the federally declared Covid-19 disaster period, as well as a statutorily mandated 60-day extension.
“By the court’s logic, the IRS should not have assessed penalties for late filing or payment during that 3.5-year period [between Jan. 20, 2020, and July 10, 2023], nor charged interest on those amounts,” National Taxpayer Advocate Erin M. Collins wrote in an April 30 blog post.
Because taxpayers generally have three years to request a refund, the deadline to file a claim stemming from Kwong is July 10, 2026.
At this point, there’s no guarantee you’ll get any money back. The IRS is widely expected to appeal the ruling, according to Alyssa Maloof Whatley, a director at Frost Law, a tax firm based in Annapolis, Maryland.
“It may be a drawn-out case with multiple plaintiffs that takes years to resolve,” Maloof Whatley told CNBC Select. “Even something simple, like resolving an identity theft issue, can take a year or two.”
In addition, claims must be submitted by paper, which would be “a huge administrative burden” for the IRS to address, she added.
Still, filing a protective claim before the statute of limitations expires preserves your rights if the Kwong decision is ultimately upheld.
“If you don’t file, you won’t be eligible for any benefit,” Maloof Whatley said.
Who can file a claim for Covid tax relief?
Anyone who paid penalties and interest for failure to file or failure to pay between Jan. 20, 2020, and July 11, 2023, can submit a Form 843 to preserve their opportunity for a refund.
You can also submit a claim if you were assessed penalties but haven’t paid them yet. In that case, Maloof Whately explained, you’d request an abatement to have the charges reduced or removed.
“Those people don’t have the July 10 deadline,” she added. “But as a tax attorney, I’d say don’t wait.”
How to file a claim
Form 843 can be downloaded directly from the IRS website, but it must be submitted on paper.
“That’s due to the nature of the form, the fact that it doesn’t cover one particular tax year and that it’s not [submitted] through your tax return,” Lisa Greene-Lewis, a CPA and tax expert at TurboTax, told CNBC Select via email.
To see what eligible penalties and interest you paid or still owe, you should request your IRS tax account transcripts for tax years 2019, 2020, and 2021. You can view your tax records by accessing your IRS Individual Online Account.
When completing Form 843, you must list:
the tax years involved
the refund amount requested
the grounds for your claim
“Specify that it is a protective claim based on the Covid-19 disaster period and court rulings,” Greene-Lewis said.
The form must be mailed to the service center where you would normally file your current year tax return. Greene-Lewis advises sending certified return mail with a signature to ensure there is documentation it was received by the IRS.
While some filers may be able to complete the form themselves, determining which penalties are eligible for a claim may require a tax professional.
“If everything was paid during the Kwong window, it’s pretty easy to calculate what you should get back,” Maloof Whatley said. “If there are partial claims, though, it’s incredibly difficult to determine the right amount without a tax background.“
To help, she’s launched Covidtaxrefunds.com, an online platform that will assess your eligibility for a Kwong claim, calculate the penalty and interest you’re owed back and help you complete your claim.
Initial eligibility verification costs $9, while preparing Form 843 with your specific information can range from $75 to $499.
“It’s not my goal to make money with this,” said Maloof Whatley, who also co-founded the tax resolution app EasAly AI. “These taxpayers don’t need to be exploited one more time.”
How to get help paying back taxes
The U.S. Treasury Department has voiced its disagreement with the court’s decision in Kwong and further appeals will likely be filed. So, even if you have an eligible tax debt, filing Form 843 won’t automatically eliminate it.
“Taxpayers are still required to pay their tax bills for the affected period to avoid additional penalties,” Greene-Lewis said.
Fees and interest begin accruing as soon as you miss a deadline. The failure-to-pay penalty is generally 0.5% per month, up to 25%. The failure-to-file penalty is harsher: 5% per month, also up to 25%.
IRS payment plan options
If you can’t pay your tax balance in full, the IRS offers several installment plans that can help. Interest continues to accrue (and some plans have setup fees), but as long as you remain compliant, you’re protected from aggressive collection actions like wage garnishment or asset seizure. The failure-to-pay penalty is also reduced to 0.25% per month.
Short-term plan: Taxpayers who owe $100,000 or less in combined tax, penalties and interest have 180 days to pay their balance.
Long-term plan: If you owe $50,000 or less, you can take up to 72 months to pay off your obligation. The set-up fee may be waived for lower-income applicants.
Guaranteed installment agreement: Typically approved automatically if you owe $10,000 or less, this option gives you 36 months to pay the balance.
Offer in compromise (OIC)
An OIC allows you to settle your tax debt for less than you owe. The IRS considers income, assets, expenses, and financial hardship, but historically, only about a third of OICs are accepted.
Partial Payment Installment Agreement (PPIA)
If you’re not able to pay the full balance, a PPIA allows you to make affordable monthly payments until the collection statute of limitations expires (usually 10 years), at which point the remainder of the debt is considered settled. A PPIA also stops most collection actions.
Currently Not Collectible (CNC) status
If you’re experiencing serious financial hardship, you can ask the IRS to suspend collection activity. CNC status does not forgive the balance or stop interest from accruing.
Penalty relief
Penalty abatement may be available if you can show you tried to comply but couldn’t due to circumstances beyond your control, such as a natural disaster, serious illness or death in the family.
Tax relief companies
Many taxpayers can apply for these options themselves, but tax relief companies can act as your representative. Their services aren’t cheap, but they have more experience negotiating with the IRS and may be more successful in reducing or eliminating penalties or stopping collection actions.
Precision Tax Relief reports a 94% success rate with OICs and offers a 30-day money-back guarantee. Another CNBC Select top pick, Community Tax, offers full-service tax filing, audit and bookkeeping support.
Source: CNBC