A federal court decision issued in November 2025 could affect IRS penalties and interest assessed during the COVID-19 emergency period, potentially allowing some taxpayers to seek refunds.

In Kwong v. United States, the U.S. Court of Federal Claims ruled that Section 7508A(d) suspended certain federal tax deadlines nationwide from January 20, 2020, through July 10, 2023. The court said that suspension could affect failure-to-file penalties, failure-to-pay penalties, and some underpayment interest assessed during that period.

The court rejected the government’s argument that IRS pandemic guidance limited the scope of the relief. It found that the statutory language applied nationwide during the COVID-19 disaster period, even though IRS notices had provided narrower deadline extensions.

The ruling also addressed the deadline for filing a refund suit under Section 6532. In the case, the taxpayer filed suit in February 2023 after the IRS had disallowed refund claims in 2020. The court held that the disaster period suspended that filing deadline.

The decision may matter for taxpayers who paid penalties or interest during tax years 2019 through 2022, including some individuals, businesses, taxpayers on installment agreements, and taxpayers who resolved audits during that period.

The IRS had not announced whether it would appeal the ruling or issue broader guidance. That leaves uncertainty for taxpayers considering whether to file claims while statutes of limitations continue to run.

For many administrative refund claims filed on Form 843, the relevant deadline may run into July 2026, depending on the type of claim and the taxpayer’s filing timeline. Taxpayers reviewing whether they were charged during the covered period may use IRS account transcripts to identify assessments made between January 20, 2020, and July 10, 2023.

The decision does not create an automatic refund process. Taxpayers would generally need to identify eligible penalties or interest and file a claim if they want to seek relief.

Source: You may be owed an IRS tax refund from COVID: What you need to do right now | silive.com