Millions of Americans paid late-filing penalties, late-payment penalties, or interest charges to the IRS during the early months of the COVID-19 pandemic. Now, an independent government watchdog says many of those charges may have been illegal, and the window to claim a refund closes permanently on July 10, 2026.
The catch: there is no online option. The only way to preserve your right to that money is to fill out a paper form, IRS Form 843, and mail it before the deadline.
The National Taxpayer Advocate, an independent office inside the IRS that represents taxpayer interests, issued an alert in April 2026 warning that tens of millions of taxpayers could be eligible for significant refunds. The issue stems from a legal fight over whether the IRS violated its own disaster relief rules when it assessed those penalties during the pandemic postponement period.
Here is what happened, who is affected, and exactly how to protect yourself before the deadline passes.
Why the IRS may have overcharged millions of taxpayers
When the pandemic struck in early 2020, the IRS used its authority under Internal Revenue Code Section 7508A to postpone tax filing and payment deadlines. That statute does not just push back due dates. It also requires the postponed period to be “disregarded” when calculating penalties and interest on late payments.
The IRS confirmed this in its own guidance. Notice 2020-18 moved the April 15, 2020 filing and payment deadline to July 15, 2020. Notice 2020-23, published in Internal Revenue Bulletin 2020-15, extended relief to a broader set of tax obligations due between April 1 and July 15, 2020, and explicitly stated the agency would not count the postponed window against taxpayers for penalty and interest purposes.
Yet many taxpayers were still assessed penalties and interest during that exact stretch, creating a direct conflict between what the statute appears to require and what the IRS actually collected.
A lawsuit, Hawkins v. United States (case number 1:23-cv-00267), filed in the U.S. Court of Federal Claims, has brought this conflict to a head. The central legal argument: a proper reading of Section 7508A’s disaster postponement provisions means those penalties and interest were improperly assessed. If the court agrees, the IRS would owe refunds to every taxpayer who paid them.
Who is potentially affected
You may have a claim if you paid any of the following to the IRS during the COVID-19 disaster postponement period, which covered tax obligations due between April 1 and July 15, 2020 (with some extensions running longer under subsequent IRS notices):
- Late-filing penalties (typically 5% of unpaid taxes per month, up to 25%)
- Late-payment penalties (typically 0.5% of unpaid taxes per month, up to 25%)
- Interest charges on unpaid balances during the postponed period
The National Taxpayer Advocate’s “tens of millions” figure is an estimate of potentially eligible taxpayers, not a confirmed count of people who will receive refunds. The actual scope of relief depends entirely on how the court case is resolved. But the Advocate’s office is urging people to file claims now to preserve their rights, regardless of the outcome.
Not sure if you were charged these penalties? You can check by reviewing any CP14 or CP501 notices the IRS sent you during 2020, or by pulling your IRS account transcript. Transcripts are available online through your IRS Online Account or by filing Form 4506-T to request them by mail. Look for penalty and interest charges dated within the April-to-July 2020 window. If you use a tax preparer or tax software, consider reaching out to them as well; some preparers and software providers may be able to help identify whether penalties were assessed on returns they filed on your behalf.
Some taxpayers already received automatic penalty relief or case-by-case abatements during the pandemic. Others were charged the full amount and never received any adjustment. Without comprehensive IRS disclosure of how consistently penalties were applied during the disaster period, the full pattern of assessments and overcollections remains unclear.
Why the deadline is July 10, 2026
Federal tax law requires refund claims to be filed within strict time limits. Under IRC Section 6511, you generally must file within two years from the date you paid the tax (or penalty), or three years from the date the return was filed, whichever applies. For taxpayers who made payments during the 2020 disaster postponement period, those statutory windows close around mid-2026.
The July 10 date comes from the National Taxpayer Advocate’s analysis of when the latest of those windows expires for the broadest group of affected taxpayers. It is not a date the IRS itself has formally announced. But the legal math is straightforward: once the statute of limitations runs out, the IRS is no longer required to honor a refund request, even if a court later rules the penalties were wrongly assessed.
That is why the Advocate is emphasizing urgency. Filing before July 10 does not guarantee a refund. It preserves your legal right to receive one if the courts ultimately rule in taxpayers’ favor.
What a “protective claim” is and how to file one
A protective claim is a formal refund request filed to preserve your rights while a legal question is still being decided. You are essentially telling the IRS: “I believe I may be owed money based on a pending legal interpretation, and I am filing this claim so I do not lose my right to a refund if that interpretation is confirmed.”
The National Taxpayer Advocate’s May 2026 guidance explains that even taxpayers who are not certain of their exact eligibility should consider filing. An imperfect claim submitted before the deadline is far better than a perfect one submitted after it.
Here is how to do it:
- Download Form 843 from the IRS website. This is the official form for requesting a refund or abatement of penalties and interest.
- Complete the form using the IRS Form 843 instructions. In the explanation section, clearly state that your claim relates to penalties and interest assessed during the COVID-19 disaster postponement period under Section 7508A of the Internal Revenue Code. If you know the specific tax years and penalty amounts, include them. If you are unsure of exact figures, note that the claim is protective and based on the pending legal interpretation of Section 7508A disaster relief provisions.
- Print and mail the form to the IRS address listed in the instructions for your state or territory. Form 843 cannot be filed electronically.
- Keep copies of everything you send, including the completed form and any supporting documents. Use certified mail or a delivery service with tracking so you have proof of the mailing date. That postmark is your evidence the claim was timely.
What is still unresolved
The court case that could trigger widespread refunds has not reached a final ruling as of June 2026. The IRS has not conceded that its interpretation of the disaster provisions is wrong, and the agency could argue that its reading of which “acts” were postponed, and which penalty categories fall under Section 7508A, differs from the taxpayer-side position.
The IRS has also not published official statistics on how many penalties were assessed during the COVID disaster period or the total dollar amount collected. Without those numbers, the true scale of potential refunds remains an open question.
On the processing side, there is no public information on how many Form 843 claims the IRS expects to receive before the deadline, or how long it will take to work through them. The IRS’s Internal Revenue Manual includes procedures for handling abatement requests and disaster-related claims, but those describe general workflows, not capacity plans for a potential surge of millions of protective filings. Taxpayers who file should expect a long wait before learning whether their refund is approved.
The implementing regulations at 26 CFR Section 301.7508A-1 also add a layer of complexity. They define who qualifies as an “affected taxpayer,” what acts are postponed, and what limitations apply. Not every taxpayer automatically qualifies. Eligibility depends on whether a person’s specific tax obligation fell within the postponed period and whether the penalties they paid are covered by the disaster provisions.
File Form 843 before July 10 or lose your refund rights permanently
The National Taxpayer Advocate is not promising refunds. The office is warning that taxpayers who do not file a claim by July 10, 2026, will permanently lose the right to seek one if the legal interpretation is later confirmed in their favor.
For anyone unsure whether they qualify, the Advocate’s guidance is unambiguous: file the protective claim anyway. The cost is a sheet of paper and a stamp. The cost of not filing could be hundreds or thousands of dollars you never get back.
Taxpayers with complex situations, multiple tax years involved, or limited familiarity with IRS forms can consult a qualified tax professional or contact a Low Income Taxpayer Clinic for free or low-cost help. But the core action is simple: download Form 843, fill it out, and get it in the mail before July 10. Once that date passes, the door closes for good.
