The IRS has opened an online portal for Kwong Covid-era claims.
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The IRS has added an option to its mobile-friendly forms page that allows individual taxpayers to electronically file Form 843, Request for Refund and Request for Reduction, for protective refund claims related to Kwong v. United States. THE new online option limited to individual taxpayers who e-file Form 843 for Kwong-related claims involving fully paid penalties and interest. Business taxpayers must file a paper Form 843, and individuals who prefer not to use the online option can also file forms.
Taxpayers seeking to reduce unpaid penalties or interest may continue to use Form 843but the new IRS e-filing option appears to be limited to claims involving amounts that have already been paid.
To use the online filing option, taxpayers must have an IRS online account.
The timing matters because the IRS has appealed the Kwong decision. Protective refund claims are designed to preserve a taxpayer’s rights while a legal issue remains unresolved. If the government ultimately wins on appeal,
“There is a narrow window for taxpayers who have not yet filed a claim,” said Glen Frost of Frost Law Firm in a press release. “This new online portal creates a shortcut for people to get their refund request before the deadline. If people have paid fines or interest during the pandemic, this is a last-minute opportunity to file a claim quickly.”
National Taxpayer Advocate Erin Collins also pointed to the deadline in a blog post, calling the result “an unfair outcome” for taxpayers who may eventually be entitled to refunds but don’t know they need to file now.
“When relief is available but taxpayers need to know to ask for it, unrepresented taxpayers, low-income taxpayers and taxpayers who cannot easily obtain copies or professional help are at particular risk of missing out on refunds.” Collins wrotem. “In fact, I suspect that only a small fraction of potentially eligible taxpayers will file timely claims.”
(I totally agree with her point.)
What are Kwong refund claims?
The refund opportunity stems from Kwong v. United States, a federal tax refund case decided by the US Court of Federal Claims. The court ruled that certain tax deadlines were automatically postponed for the entire period that the COVID-19 pandemic was treated as a federal disaster — plus 60 days.
This interpretation could open the door for some taxpayers to seek recovery of certain IRS penalties and interest assessed during the period of the COVID-19 disaster. For most taxpayers, the protective claim deadline is July 10, 2026.
Background
The case was brought by Terry Kwong, an individual taxpayer in California. His case began long before the pandemic.
Kwong had been advised of a loss carryforward in connection with a transaction that began in 2005. Years later, the IRS reduced the amount of the loss. This adjustment resulted in the depletion of the loss in the 2005 and 2006 tax years.
Because Kwong anticipated that the loss would be sufficient to cover future years’ taxes, he failed to timely resolve his tax obligations for 2007, 2010 and 2011. He also failed to timely file his 2010 and 2011 federal tax returns. As a result, he was assessed failure to file and failure to pay penalties for those tax years 2007, 2010 and 2011.
Kwong later hired a new accountant and filed and paid his taxes on time in 2015. But the IRS moved his entire payment to another tax year to satisfy the existing balance due and then assessed significant delinquency penalties. The same was true for the 2016 tax year.
When Kwong discovered what had happened, he met with the IRS and arranged to pay his tax liabilities in full for the years 2007, 2010, 2011, 2015 and 2016. Then in 2020, he filed refund claims for penalties and interest for those years, arguing that he had acted with reasonable cause and in good faith.
The IRS rejected his claims in September and October 2020.
Kwong filed a refund lawsuit in 2023 in United States Federal Court. Unlike federal district courts, which handle a wide range of civil and criminal cases, the Court of Federal Claims has national jurisdiction over certain money claims, including federal tax refund actions.
Kwong’s argument and timing
Under section 6532 of the Internal Revenue Code, a taxpayer generally has two years from the date the IRS mails a notice of disallowance to file a refund action in federal court. Kwong didn’t file his lawsuit until February 2023, more than two years after the IRS rejected his claims. The government moved for summary judgment, arguing that the claims were untimely because Kwong waited too long.
Summary judgment is a decision made by a court for one party and against another before trial. In a civil case, it is triggered by a pretrial motion asking the court to rule because there is no genuine dispute of material fact and the trafficker is entitled to judgment as a matter of law.
Judge Meyers dissented from the government. He ruled in favor of Kwong on the issue of timeliness, finding that the action could proceed.
At issue was section 7508A of the Internal Revenue Code, which provides relief to taxpayers affected by federally declared disasters by postponing certain federal tax deadlines, including deadlines for filing returns and claiming refunds. The IRS pointed to its own COVID-19 relief notices, including the 2020-23 Notice, which only extended certain deadlines by a few months in 2020. The government also argued that section 7508A was discretionary, meaning the Treasury Secretary had the power to decide how much to extend the deadlines.
Justice Meyers focused on Congress’s use of the word “shall,” which he read as mandatory rather than discretionary. Under that reading, the moratorium automatically applied for the entire federally declared disaster period, plus 60 days. For COVID-19, the applicable federal disaster period began on January 20, 2020 and ended on May 11, 2023. Adding 60 days brings the date to July 10, 2023.
For Kwong, this meant that the time to file the refund claim was interrupted, so his filing was not delayed.
What Kwong did—and didn’t decide
Kwong was not a complete victory. Kwong didn’t actually get everything he asked for. He ultimately recovered money for only one tax year and was not awarded costs or attorneys’ fees. It’s a useful reminder that being able to make a claim is not the same thing as winning the full amount claimed.
Filing a claim reserves the right to seek a refund if Kwong survives the appeal and applies to the taxpayer’s facts, but does not guarantee victory.
What about Abdo?
Kwong is getting most of the attention, but it was not the first case to examine how section 7508A was applied during the pandemic. In Abdo v. Commissioner, the US Tax Court reached a similar conclusion. The court found that, pursuant to section 7508A, an automatic grace period applied, making the taxpayers’ petition timely.
Both Abdo and Kwong are significant because the courts carefully considered the statutory text rather than simply deferring to IRS administrative guidance. This approach also fits, post-Loper Bright, where courts no longer suspend agency interpretations simply because a statute is ambiguous.
Congress later changed the rule
Congress later amended section 7508A on November 15, 2021, changing the formula for future disaster-related deferrals. The modified version generally results in much shorter deferral periods.
However, in Kwong, Judge Meyers ruled that the 2021 change does not apply retroactively to the COVID-19 disaster period because the pandemic disaster declaration began before the law changed.
What does this mean for taxpayers?
Tax firms and taxpayers see an opportunity because Kwong interpreted section 7508A to automatically postpone certain federal tax deadlines for the full period of the COVID-19 disaster, plus 60 days. The argument is that certain default penalties, default penalties and interest assessed during the affected period may not have been appropriate if the relevant statutory deadlines were postponed. As a result, taxpayers who paid these amounts may request a refund or reduction.
Why Protective Claims Matter
The Kwong decision is not final. The government has appealed, and the IRS has until July 20, 2026, to file its brief.
If the Federal Circuit overturns Kwong, refund claims based on the decision may be dismissed. But if the decision is upheld and you failed to file a timely claim, you may be out of luck. That’s why it may make sense for some taxpayers to file protective refund claims now.
What’s next for taxpayers?
If you’re not sure if this applies to you, start by checking your transcript. Look for penalty codes such as 160 for failure to submit and 166 for failure to pay during the relevant claims window. Also take a look at whether interest was assessed or paid on those penalties or late payments.
If the amounts are significant, it may be worth talking to a reputable tax professional who can review the transcripts, evaluate the claim, and help you decide whether filing Form 843 makes sense.
Just pay attention to these deadlines. The IRS’ new online option may make filing easier for some people, but it doesn’t extend the deadline. For many taxpayers, 10 July 2026 is still the date that matters.
