The Internal Revenue Service (IRS) building in Washington, DC, US, on Tuesday, Dec. 31, 2024. Photographer: Samuel Corum/Bloomberg via Getty Images
Millions of taxpayers who may be entitled to IRS refunds or relief from penalties and interest have only days left to file claims before a July 10 deadline.
The National Taxpayer Advocate, the independent watchdog, said tens of millions of taxpayers could qualify for refunds or abatements for penalties and interest assessed by the IRS during the 3.5-year COVID-19 disaster declaration period.
However, the relief is not automatic.
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The backstory:
The issue stems from recent court decisions, including a ruling in the case known as Kwong, which found that the tax code's treatment of federal disaster declarations effectively postponed tax filing and payment deadlines from Jan. 20, 2020, through May 11, 2023.
What you can do:
Although the Justice Department may appeal the ruling, affected taxpayers generally must file refund claims by July 10, 2026, unless the IRS or Congress takes further action.
IRS unveiled the filing form on its website.
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What they're saying:
"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.
The taxpayer advocate warned that many eligible taxpayers could miss out simply because they are unaware of the approaching deadline.
"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.
"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,'" the advocate added.
Why you should care:
The taxpayer advocate said affected taxpayers may be entitled to a refund or abatement for:
- Penalties assessed for failure to file timely returns, failure to pay taxes, or failure to make estimated tax payments;
- Interest that began accruing earlier than it should have, or not at all; and
- Overpayment interest for the 2020-2023 disaster period.
The Source: FOX Business contributed to this report. The information also comes from a notice issued by the National Taxpayer Advocate, an independent organization. This story was reported from Los Angeles.