The IRS may owe COVID-era refunds to tens of millions of taxpayers. Here’s who could qualify

Tens of millions of taxpayers may be able to get money back from the IRS for certain penalties and interest they were charged during the COVID-19 pandemic, according to a recent blog post from National Taxpayer Advocate’s Erin M. Collins. But the refunds are not automatic, and most taxpayers who may qualify need to file a claim by July 10. The stakes are significant. In fiscal 2022 alone, the IRS levied more than 12 million estimated-tax penalties and over 16 million failure-to-pay penalties totaling more than $12 billion. The IRS previously refunded about $1.2 billion in penalties to roughly 1.6 million taxpayers under a narrower 2022 relief notice, but tax professionals say the legal theory at issue here reaches far more taxpayers. Why the IRS may owe refunds The possible refunds stem from Kwong v. United States, a November 2025 ruling by Judge Molly Silfen of the U.S. Court of Federal Claims that turned on how long pandemic-era tax deadlines were paused. FEMA’s COVID-19 disaster incident period ran from Jan. 20, 2020, through May 11, 2023, and tax law added another 60 days, extending the period to July 10, 2023, for tax purposes. In Kwong, the court interpreted the law to mean that the filing and payment deadlines were automatically extended for the entire 3.5-year window. “The plain meaning of that statute is that the automatic extension runs from the beginning of the disaster declaration, through the end of the declared disaster period, and until 60 days after the end of the declared disaster period,” the court wrote. If that view holds up, taxpayers who were charged late-filing or late-payment penalties or interest during the COVID period may have been charged on returns and payments that, by the court’s reading, were never actually late. The ruling did not come out of nowhere. It builds on a 2024 U.S. Tax Court decision, Abdo v. Commissioner, which similarly held that the disaster postponement was mandatory and self-executing. To