Tens of millions of taxpayers who paid penalties and interest on balances the IRS treated as overdue during the COVID-19 federal disaster period may be entitled to refunds, but they have only until July 10, 2026, to file the paperwork that preserves that right. The National Taxpayer Advocate has urged affected filers to submit Form 843 as a protective claim before the deadline expires. Missing it could permanently forfeit eligibility, even if courts later confirm the IRS charged those amounts improperly.
Why the July 10 deadline puts COVID-era penalty refunds at risk
During the pandemic, the federal government declared a national disaster and postponed various tax deadlines. The core dispute is whether those postponements should have shielded taxpayers from failure-to-pay penalties and related interest that the IRS continued to assess through its automated systems between 2020 and 2022. A federal court case, Kwong v. United States, sided with taxpayers on that question, concluding that disaster-relief provisions extended the deadlines and made many of those charges wrong from the start.
The IRS has not conceded the point across the board. Its position and the litigation remain unresolved, which is exactly why the deadline matters so much. Under the Internal Revenue Code, refund claims must generally be filed within a fixed statutory window. Once that window closes, even a taxpayer who was clearly overcharged loses the legal ability to recover the money. The Taxpayer Advocate’s July alert warned that July 10, 2026, is the last day many filers can submit a protective claim to keep their refund rights alive while the legal question works its way through the system.
A protective claim is not a full-blown refund request with every supporting document attached. It is a placeholder filing that tells the IRS a taxpayer intends to seek a refund based on a legal theory that has not yet been fully resolved. The IRS Internal Revenue Manual, specifically section 21.5.3, lays out how the agency receives and holds these claims until the underlying issue is settled. Filing one by the deadline stops the statute-of-limitations clock from running out, and the IRS’s guidance in IRM 21.5.3 confirms that protective claims are suspended while the controlling dispute is pending.
How Form 843 works and who should file it
The required vehicle is Form 843, which the IRS designates for requesting refunds or abatement of certain penalties and interest. This is not the same as filing an amended return. The IRS has published specific instructions for claims citing Kwong v. United States, confirming that taxpayers should reference that case when submitting their forms and clearly describe how COVID-19 disaster relief affected their filing or payment deadlines.
The National Taxpayer Advocate has emphasized that the potential pool of affected taxpayers is huge. In an April 2026 blog post, the office estimated that tens of millions of filers may have been assessed penalties and interest that are now in question. That estimate reflects the sheer volume of automated notices the IRS issued during the disaster period, often without fully integrating the evolving relief rules into its systems.
Who, specifically, should act? Any individual or business that received a failure-to-pay penalty or was charged interest on a balance the IRS deemed late during the COVID-19 federal disaster window should review their tax transcripts for those years. If the penalty or interest traces back to a deadline that disaster-relief rules arguably extended, a protective claim may be appropriate. This can include taxpayers who filed on time under the postponed dates but were nevertheless treated as late, as well as those who reasonably relied on IRS announcements or guidance about extended payment deadlines.
Taxpayers do not need to prove their entire case when they file Form 843 as a protective claim. However, they should provide enough detail for the IRS to identify the tax period, the type of penalty or interest at issue, and the legal basis for the claim. That typically means listing the tax year, the form number, the date the IRS assessed the charges, and a short explanation that the amounts are being challenged based on the application of COVID-19 disaster-relief postponements and the reasoning in Kwong.
Practical steps to preserve your rights
To protect potential refunds, taxpayers should first obtain and review account transcripts for the 2020, 2021, and 2022 tax years to spot failure-to-pay penalties and related interest that arose while COVID-19 relief was in effect. Next, they should complete a separate Form 843 for each affected year, checking the boxes for penalty and interest, and stating that the filing is a protective claim tied to unresolved litigation over disaster-relief extensions.
Forms must generally be mailed to the IRS service center that processed the original return. Because mailing addresses and procedures can change, filers should verify the correct destination using current IRS instructions before sending anything. Keeping proof of timely mailing-such as certified mail receipts or other trackable delivery records-is essential, since the July 10, 2026, deadline is strict and disputes about when a claim was filed can arise years later.
Tax professionals can help determine whether a particular assessment is likely to fall within the disputed category and can assist in drafting clear, concise explanations for Form 843. Even so, the key point from the National Taxpayer Advocate is that filing a protective claim now is about preserving the option to benefit from a favorable outcome later. If courts ultimately rule against taxpayers on the underlying legal issue, the claims will simply be denied. But if the litigation confirms that COVID-era penalties and interest were improperly imposed, only those who met the deadline will be positioned to receive refunds.
