Here’s something that flew under the radar for most people: a court decision from late last year could put money back in your pocket if you got hit with IRS penalties during COVID. But you need to act fast! For some taxpayers, the deadline to file a claim is July 10.
What This Case Is Actually About
Remember when COVID was declared a federal disaster? That designation wasn’t just symbolic. It triggered real protections under the tax code, specifically Section 7508A, which lets the IRS push back deadlines and waive penalties when taxpayers are caught up in a disaster. We’re talking about failure-to-file and failure-to-pay penalties here, and those fees can add up to almost 50 percent of what you already owe, which is brutal!
The Kwong v. United States decision came down from the Court of Federal Claims in November 2025, and it changed the game. The court said the nationwide COVID emergency created a mandatory postponement running from Jan. 20, 2020, through July 10, 2023. Everything that came due in that window should have been bumped to July 11, 2023. In other words, a lot of people may have been penalized when they shouldn’t have been.
This Got Real on April 30
The case had been percolating quietly until the National Taxpayer Advocate (NTA) made some noise about it on April 30. That’s when things got interesting. According to the NTA, tens of millions of taxpayers could be eligible for refunds. Not just on the penalties themselves, but on the interest that piled up on top of those penalties.
The NTA isn’t being shy about this either. The office has pushed hard for the IRS to apply relief broadly instead of making people jump through hoops. They want systemic fixes, not case-by-case battles. And they’ve asked Congress to make sure procedural red tape doesn’t rob people of money they are owed.
There’s another wrinkle worth knowing about. Some refunds issued during 2020 through 2023 may have shortchanged taxpayers on interest because the IRS treated their returns as late. If Kwong holds up, you might be able to claim that missing interest, too.
Expats Had It Especially Rough
If you were living overseas when the pandemic hit, you know the chaos was next level. Borders slammed shut with no warning. People got stranded in countries they were just passing through. Others couldn’t get back to the places they’d been living for years.
Good luck reaching your accountant when consulates are closed, mail isn’t moving, and you’re dealing with a 12-hour time zone difference. Some folks couldn’t access their bank accounts. Others couldn’t get basic documents. And plenty of people were simply stuck, unable to go anywhere, when their filing deadlines rolled around.
Slapping penalties on taxpayers who were dealing with all of that? It misses the point entirely. The disaster relief rules exist for exactly these situations. The NTA has been clear: fair treatment means recognizing what people were actually going through.
You Need to File a Protective Claim
Here’s the practical part. If you want to preserve your right to get this money back, you have to file something called a protective claim. Think of it as a placeholder that keeps your options open while the legal dust settles.
For many people, the deadline is July 10, 2026, though it depends on the tax year involved. Don’t wait until the last minute to figure this out.
The good news is the paperwork isn’t complicated. You can use IRS Form 843 or just file an amended return. You need to list the tax years you’re claiming and note that your refund depends on how the Kwong case plays out. You don’t have to calculate the exact dollar amount right now. The whole point is just to get yourself on record before time runs out.
A Few Limitations to Know About
This relief is specifically about federal income taxes under the Internal Revenue Code. If you’re worried about Report of Foreign Bank and Financial Accounts (FBAR) penalties, that’s a different animal. FBARs fall under the Bank Secrecy Act, so Kwong doesn’t automatically help there. That said, you might still have a reasonable cause argument based on the same COVID disruptions.
State taxes? Every state did its own thing. Most offered some pandemic extensions, but those programs were separate and usually more limited than what we’re talking about here.
Conclusion
If there’s any chance this applies to you, file that protective claim now. Especially if you were overseas during the pandemic years. Once that deadline passes, the door closes for good.
The IRS Could Owe You Money Thanks to a Pandemic-Era Court Ruling
June 1, 2026 · Blog, News, Tax and Financial News
⏱ 4 min read
Here’s something that flew under the radar for most people: a court decision from late last year could put money back in your pocket if you got hit with IRS penalties during COVID. But you need to act fast! For some taxpayers, the deadline to file a claim is July 10.
What This Case Is Actually About
Remember when COVID was declared a federal disaster? That designation wasn’t just symbolic. It triggered real protections under the tax code, specifically Section 7508A, which lets the IRS push back deadlines and waive penalties when taxpayers are caught up in a disaster. We’re talking about failure-to-file and failure-to-pay penalties here, and those fees can add up to almost 50 percent of what you already owe, which is brutal!
The Kwong v. United States decision came down from the Court of Federal Claims in November 2025, and it changed the game. The court said the nationwide COVID emergency created a mandatory postponement running from Jan. 20, 2020, through July 10, 2023. Everything that came due in that window should have been bumped to July 11, 2023. In other words, a lot of people may have been penalized when they shouldn’t have been.
This Got Real on April 30
The case had been percolating quietly until the National Taxpayer Advocate (NTA) made some noise about it on April 30. That’s when things got interesting. According to the NTA, tens of millions of taxpayers could be eligible for refunds. Not just on the penalties themselves, but on the interest that piled up on top of those penalties.
The NTA isn’t being shy about this either. The office has pushed hard for the IRS to apply relief broadly instead of making people jump through hoops. They want systemic fixes, not case-by-case battles. And they’ve asked Congress to make sure procedural red tape doesn’t rob people of money they are owed.
There’s another wrinkle worth knowing about. Some refunds issued during 2020 through 2023 may have shortchanged taxpayers on interest because the IRS treated their returns as late. If Kwong holds up, you might be able to claim that missing interest, too.
Expats Had It Especially Rough
If you were living overseas when the pandemic hit, you know the chaos was next level. Borders slammed shut with no warning. People got stranded in countries they were just passing through. Others couldn’t get back to the places they’d been living for years.
Good luck reaching your accountant when consulates are closed, mail isn’t moving, and you’re dealing with a 12-hour time zone difference. Some folks couldn’t access their bank accounts. Others couldn’t get basic documents. And plenty of people were simply stuck, unable to go anywhere, when their filing deadlines rolled around.
Slapping penalties on taxpayers who were dealing with all of that? It misses the point entirely. The disaster relief rules exist for exactly these situations. The NTA has been clear: fair treatment means recognizing what people were actually going through.
You Need to File a Protective Claim
Here’s the practical part. If you want to preserve your right to get this money back, you have to file something called a protective claim. Think of it as a placeholder that keeps your options open while the legal dust settles.
For many people, the deadline is July 10, 2026, though it depends on the tax year involved. Don’t wait until the last minute to figure this out.
The good news is the paperwork isn’t complicated. You can use IRS Form 843 or just file an amended return. You need to list the tax years you’re claiming and note that your refund depends on how the Kwong case plays out. You don’t have to calculate the exact dollar amount right now. The whole point is just to get yourself on record before time runs out.
A Few Limitations to Know About
This relief is specifically about federal income taxes under the Internal Revenue Code. If you’re worried about Report of Foreign Bank and Financial Accounts (FBAR) penalties, that’s a different animal. FBARs fall under the Bank Secrecy Act, so Kwong doesn’t automatically help there. That said, you might still have a reasonable cause argument based on the same COVID disruptions.
State taxes? Every state did its own thing. Most offered some pandemic extensions, but those programs were separate and usually more limited than what we’re talking about here.
Conclusion
If there’s any chance this applies to you, file that protective claim now. Especially if you were overseas during the pandemic years. Once that deadline passes, the door closes for good.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
In the realm of personal finance, few tasks provoke as much procrastination as estate planning. Yet, understanding the nuances of estate planning is tantamount to assuming control over one’s financial legacy and ensuring peace of mind for oneself and one’s family. With this in mind, let’s embark on a journey through the essential facets of estate planning.
The crux of estate planning lies not merely in delineating the fate of one’s assets posthumously but also in articulating one’s wishes in the event of incapacitation. The stark reality is that a mere one-third of Americans have their estate planning documents in order, a statistic that reveals a troubling gap in our collective financial preparedness. Estate planning is the process of anticipating and arranging for the management and disposal of a person’s estate during the person’s life in preparation for a person’s future incapacity or death.
“We think of it as a Loving Trust – not a Living Trust.”
Judy Portnoy, an Estate and Trust Lawyer at Soffer Law Group in Beverly Hills, aptly notes the emotional and logistical turmoil that can ensue in the absence of a clear estate plan. The process of estate planning, therefore, is not just an administrative task but a profound gesture of care and foresight, offering clarity and direction during life’s most challenging moments. “We think of it as a Loving Trust – not a Living Trust,” she says.
Get a head-start on planning and follow these 5 easy steps before engaging a lawyer:
Take Inventory of Your Estate
Review the Beneficiary Designations of Life Insurance and Retirement Plans
Check on Healthcare Coverage
Consider Life Insurance
Store All Important Documents and Passwords in One Place
Embarking on the creation of a comprehensive estate plan involves several key steps beyond drafting a will. It encompasses decisions about property distribution, charitable bequests, and the appointment of an executor, as well as directives for medical care and the nomination of individuals to make decisions on one’s behalf in the event of incapacity. Judy underscores the emotional weight of such decisions, highlighting the importance of clear directives to alleviate the burden on loved ones.
However, estate planning extends beyond these foundational elements. The intricacies of beneficiary designations, the strategic use of trust funds, and the mechanisms for expediting inheritances are all critical components of a robust estate plan. Moreover, the conversation around estate planning also encompasses tax considerations, with implications that vary significantly across different states. “The impending possible changes in the estate tax laws make it advisable for affluent families to review estate planning now,” says Jonathan Gerber, President of RVW Wealth LLC in Century City. “Leaving one’s affairs in good order is imperative.”
The narrative of estate planning also touches on more personal aspects of our lives, from the care of beloved pets to the management of digital legacies. These considerations reflect the comprehensive nature of estate planning, underscoring its role in capturing the full spectrum of one’s life and values.
The journey towards a complete estate plan is navigated through a landscape of legal advice and, increasingly, online resources. For simple situations, these services are usually adequate. However, the nuanced nature of complex individual circumstances may elude the capabilities of web-based services, highlighting the irreplaceable value of personalized legal counsel. Second marriages, disabled family members, high net-worth situations, and families with young children are typically those where a bespoke estate plan is appropriate.
In the spirit of continuous adaptation and vigilance, the process of estate planning is not a one-time endeavor but a periodic exercise in reflection and revision, responsive to life’s inevitable changes and the evolving legal landscape. “A review of estate plans is a part of our new client intake,” adds Gerber, “and we encourage our clients to review their estate plans at least every 5 years – or more frequently if the situation changes”.
In the final analysis, the act of estate planning emerges not as a mere administrative necessity but as a profound expression of care, foresight, and responsibility. It is a testament to the understanding that, while we may not control our fate, we can indeed shape our legacy and provide a framework of support and clarity for those we leave behind. In this light, estate planning is not just about the distribution of assets but about the imprint we leave on the world and the ease with which our loved ones can navigate the future without us.
Here’s something that flew under the radar for most people: a court decision from late last year could put money back in your pocket if you got hit with IRS penalties during COVID. But you need to act fast! For some taxpayers, the deadline to file a claim is July 10.
In the realm of personal finance, few tasks provoke as much procrastination as estate planning. Yet, understanding the nuances of estate planning is tantamount to assuming control over one’s financial legacy and ensuring peace of mind for oneself and one’s family. With this in mind, let’s embark on a journey through the essential facets of estate planning.