A November 2025 federal court decision could mean that penalties and interest the IRS assessed during the COVID-19 disaster period were never legally authorized. If that ruling holds, millions of taxpayers may be entitled to refunds, but the window to file a protective claim closes July 10, 2026.
The Court Decision
On November 25, 2025, the U.S. Court of Federal Claims issued its decision in Kwong v. United States, ruling that IRC § 7508A(d) required an automatic suspension of all federal tax filing and payment deadlines for the full duration of the COVID-19 federal disaster declaration, January 20, 2020 through July 10, 2023.
The court found the statutory language unambiguous. It rejected the IRS’s position that the agency had discretion to limit deadline relief through administrative notices such as IRS Notice 2020-18 and related guidance.
This follows the U.S. Tax Court’s April 2024 decision in Abdo v. Commissioner, which addressed a related issue and signaled growing judicial scrutiny of IRS pandemic-era deadline guidance.
What This Means Really Means
If the Kwong ruling stands, any federal tax deadline falling within the January 20, 2020 through July 10, 2023 window was automatically postponed by statute.
The direct consequences:
Underpayment interest should not have accrued during that period
Failure-to-file penalties should not have been assessed for returns due during that period
Failure-to-pay penalties should not have been assessed for payments due during that period
Taxpayers who paid interest or penalties attributable to deadlines falling within that 3.5-year window may have a right to claim refunds.
An Important Caution
This is a single trial court decision. Final judgment has not been entered, and the government has now filed a Notice of Appeal. The legal outcome remains uncertain.
That uncertainty does not mean inaction is the right course. Because statutes of limitation are expiring on a rolling basis, waiting for appellate resolution could permanently bar otherwise valid claims.
Filing a protective claim now preserves your rights without requiring you to take any further position on the outcome of the litigation.
Who May Be Affected
You may have a claim worth evaluating if any of the following apply:
Penalties and interest paid on pandemic-era returns:
Underpayment penalties paid on 2019, 2020, 2021, or 2022 tax returns, where all payments were made by July 11, 2023
Late-filing or late-payment penalties for tax years 2019 through 2022, where returns were filed and payments were made by July 11, 2023
Active IRS matters:
Clients with open audits, active IRS controversies, or pending litigation where penalties or interest were assessed during the disaster period
Filing Deadline
The refund statute of limitations under IRC § 6511 generally expires:
Three years from the date the underlying return was filed, or
Two years from the date of payment, whichever is later
For most pandemic-era payments, the two-year window has already closed. However, the three-year period from the filing date remains open for returns filed between January 20, 2020 and July 11, 2023, and it expires on July 10, 2026.
That is a hard deadline. Protective claims must be filed on Form 843 before that date to preserve eligibility.
How to File a Protective Claim
Refund claims under these circumstances are filed on Form 843 (Claim for Refund and Request for Abatement). The claim references the Kwong decision and the statutory authority of § 7508A(d) as the basis for relief.
One protective claim may be filed per tax year. If you have potentially affected years, 2019, 2020, 2021, and 2022, separate claims are required for each.
Because the legal basis is still developing and the appeal could alter the outcome, these filings are structured as protective claims. The IRS is not expected to process them until the litigation resolves.
What to Do Before July 10, 2026
If you paid IRS penalties or interest during the COVID-19 disaster period, or if you have open tax matters from those years, the right step is a prompt review of your records.
At HBK CPAs & Consultants, our tax advisors are identifying affected clients and preparing protective claims on a timely basis. We will assess your specific tax years, evaluate the amounts at issue, and prepare the necessary filings before the statute expires.
Contact your HBK advisor or reach out to our team to request a review of your pandemic-era tax filings. Time is a real constraint here, and early action gives us the opportunity to prepare your claim carefully and correctly.
Key Takeaways
The Kwong v. United States decision (November 25, 2025) held that COVID-19 disaster relief automatically suspended federal tax deadlines from January 20, 2020 through July 10, 2023
Penalties and interest assessed during that period may have been improperly charged
The ruling is under appeal; the outcome remains uncertain
Protective claims on Form 843 must be filed by July 10, 2026 to preserve refund eligibility for most affected returns
HBK is actively reviewing client files and preparing protective claim filings
This article is for informational purposes only and does not constitute legal or tax advice. The Kwong v. United States decision is a trial court ruling that has not been finally adjudicated. Taxpayers should consult with a qualified tax advisor before taking any action.
Speak to one of our professionals about your organizational needs
