National Taxpayer Advocate Warns Millions Could Be Owed IRS Refunds From COVID-Era Penalties—Here’s What You Need to Know Before 2026 Deadline

A major shift in how the IRS views pandemic era deadlines could mean a massive payday for millions of Americans.

The National Taxpayer Advocate recently went public with a notice indicating that a vast number of citizens might have been wrongly charged for late filings or payments during the COVID-19 emergency. Because of how the law handles disaster declarations, new legal precedents suggest that the usual deadlines were essentially on hold from early 2020 through mid-2023.

This means that penalties and interest assessed during those years might actually be refundable.

The situation centers on a specific legal battle known as the Kwong case. The ruling in that matter clarified that the disaster status effectively froze the clock for taxpayers for over three years. While the government hasn’t fully conceded and may fight the ruling, the Advocate is urging people to act now rather than waiting for the IRS to offer the money back voluntarily.

“Because of the infrequency of a disaster lasting this long, most taxpayers, even most tax professionals, did not foresee that filing deadlines and payments deadlines would be postponed for this long and that return filings and payments would not be considered late and therefore not subject to penalties and interest. But that is the logical extension of what the court ruled,” the National Taxpayer Advocate wrote.

If you were hit with failure to file fees, missed estimated payment penalties, or interest charges that seem to have started too early between 2020 and 2023, you need to look into filing a claim. However, this isn’t a digital fix. Currently, the IRS requires a physical Form 843 to be sent through the mail. To ensure your request doesn’t get lost in the shuffle, experts recommend using certified mail so you have proof of your filing.

The window to secure these funds is not infinite.

“Unless the IRS or Congress acts to ensure all affected taxpayers will receive refunds if the Kwong decision is upheld, taxpayers seeking refunds for penalties and interest they paid relating to that period will, in most cases, need to file claims by July 10, 2026,” the advocate explained.

Their main concern is that only people with high end tax help will find out about this while everyday taxpayers miss out. “At the risk of repetition, my overriding goal is to get the word out to as many taxpayers as possible and to avoid disparate results between the ‘well advised’ and the unaware,’” they said.