Millions of Americans may be eligible for a tax refund thanks to a recent court decision that found taxpayers should not have been charged late penalties during the COVID-19 pandemic.
Tax deadlines are required to be postponed during federally declared disasters for the duration of the emergency plus 60 days, according to tax code Section 7508A(d).
A US Court of Federal Claims last November in Kwong v. United States broadened the interpretation of this tax rule, arguing that federal tax deadlines should have been postponed for the entirety of the pandemic, from Jan. 20, 2020, through May 11, 2023, plus an additional 60 days.
That means the deadline for tax filings from 2019, 2020, 2021 and 2022 should have been extended to July 10, 2023 – so anyone who made a filing before that date and was charged a late penalty or fine may be eligible for a refund.
While the IRS will likely appeal the ruling, taxpayers only have a limited window to request a refund – so they should check their tax filings to see if they’re eligible and read below for details on how to demand a refund.
Who is eligible for the refund?
Individual taxpayers or businesses who were charged penalties or interest on late tax filings between Jan. 20, 2020, and July 10, 2023, may be eligible for a refund, according to USA Today.
For example, Western Digital – a digital storage solutions firm – sued the government in February for a partial refund of the $53.6 million it paid in taxes in August 2023.
The company argued that it should not have been charged nearly $21 million in interest because the filings were made during the disaster period.
When is the deadline to file for a tax refund?
The deadline to file for a tax refund is July 10, 2026.
Refund claims typically have a three-year statute of limitations, or two years from the time the tax was paid, depending on which extension is longer.
November’s court ruling suggested the tax deadline technically should have been shifted to July 10, 2023 – so a three-year limit would move the deadline for a refund filing to July 10, 2026, according to the report.
How to request a refund
To check if you’re eligible for a refund, taxpayers should look at their tax records to see if the IRS slapped them with any penalties or fines during the disaster period or ask their tax advisor to check their records.
Filers can access their tax transcripts on the IRS website, or they can also request a mail copy on the website or by calling the agency’s phone service at 800-908-9946.
Taxpayers can use the tax transcript to file a claim for relief or ask their advisor to file one on their behalf.
Taxpayers or their advisors should specify on the form that it’s a protective claim related to the Kwong v. United States decision, which will put the refund request on hold during the appeals process, according to the report.
