Important IRS Penalty/Interest Refund Opportunity – Action Required Before July 10, 2026

A federal tax case, Kwong v. United States, is drawing national attention because it could allow tens of millions of taxpayers to recover IRS penalties and interest assessed during the COVID-19 pandemic. The court ruled that pandemic-related filing and payment deadlines may have been automatically extended from January 20, 2020 through July 10, 2023 under Internal Revenue Code Section 7508A(d), potentially impacting both individuals and businesses.

If the ruling is ultimately upheld, taxpayers may be entitled to refunds or abatements for:
• Failure-to-file penalties
• Failure-to-pay penalties
• Underpayment interest
• Certain expired refund claims

Although the IRS is expected to challenge the decision on appeal, Killingsworth Spencer is encouraging taxpayers to file protective claims now to preserve potential refund rights before the anticipated July 10, 2026 deadline; this relief will NOT happen automatically.

We encourage clients to establish or access their IRS ID.me account and request IRS account transcripts and wage and income transcripts for tax years 2019 through 2022 to determine whether penalties or interest related to late filing or late payment were assessed during the COVID years.  If you identify qualifying penalties/interest, you should consider filing IRS Form 843 as a protective claim before the deadline expires.

Killingsworth Spencer LLC is available to assist with the preparation and filing of Form 843 protective claims for returns we originally prepared.  Our fee for preparation and filing is $650, plus applicable hourly rates for additional analysis, IRS correspondence, appeals, or related services.

Please note that there is no guarantee that the Kwong decision will ultimately be upheld on appeal, and no guarantee that the IRS will issue any refund or abatement. Protective claims are to preserve potential rights while the litigation continues.

Killingsworth Spencer in Roswell, GA, is dedicated to helping taxpayers in Fulton and Cobb Counties determine the best options for their particular circumstances. For more information on any tax matter or to schedule an appointment, please call us at 770-552-8286. Visit us at www.killingsworthspencerllc.com

Disclaimer: This post is for general information only and should not be taken as legal or financial advice.