The clock runs out on July 10, 2026
If the IRS hit you with a failure-to-file penalty, a failure-to-pay penalty, an estimated tax penalty, or underpayment interest on any return between January 20, 2020, and July 10, 2023, a federal court has now said in a case called Kwong v. United States, that those assessments may have been imposed without legal authority. The deadline to protect your right to a refund in most cases is July 10, 2026. After that date, the door closes, even if you would otherwise have won the argument.
Since 2014, Gordon Law has represented thousands of taxpayers in IRS controversy matters. We are filing Kwong protective refund claims now for clients with material penalty and interest exposure tied to tax years 2019 through 2023. If you fall into that bucket, waiting is not a strategy.
Here is what the case decided, who stands to lose the most money by missing the deadline, and the precise filing we put together for clients who retain us.
What Kwong v. United States actually decided
In Kwong v. United States, 179 Fed. Cl. 382 (Nov. 25, 2025), the U.S. Court of Federal Claims read IRC §7508A(d) as a self-executing statute that automatically suspended federal tax filing and payment deadlines for the entire COVID-19 disaster window. The court held the suspension ran from January 20, 2020, through July 10, 2023, and it rejected the Treasury position that the statute required separate implementing guidance before any deadline relief took effect.
The practical result is significant. Penalties and interest that the IRS assessed against taxpayers for failing to meet deadlines inside that window, including failure-to-file, failure-to-pay, estimated tax penalties, and underpayment interest, may have been assessed without statutory authority. That makes them recoverable through a properly framed refund or abatement claim.
Two important caveats. First, the government has appealed the court’s decision. Final resolution at the Federal Circuit, and possibly beyond, will take time. Second, the statute of limitations on most COVID-era refund claims under IRC §6511(a) is closing fast or has already closed for many taxpayers. The Kwong court treated July 10, 2026, as the latest date on which most protective claims can be filed for amounts tied to the disaster window.
In other words, the case opened a door, and the door has a hard close date.
Who has the most to lose by missing the deadline
This is where high-balance and complex cases need to act with urgency. The administrative math favors filing protectively whenever the assessed penalties and interest are large enough that the cost of preparing the claim is dwarfed by the potential recovery. For most of the cases we see, that is a comfortable threshold.
Six and seven-figure penalty stacks on late-filed 2019 through 2022 returns
Taxpayers who filed 2019, 2020, 2021, or 2022 returns late, or who paid late, often carry combined failure-to-file and failure-to-pay penalty stacks that run from low five figures to seven figures, plus underpayment interest. If the return due date or extended due date sat anywhere inside the disaster window, the entire penalty stack is potentially recoverable.
International filers with penalty exposure tied to underlying tax assessments
For taxpayers with FBAR and Form 8938 reporting issues that drove larger underlying income tax assessments, the §6651 penalties and §6601 interest stacked on top of those assessments are within scope if the assessment cycle ran during the window. The FBAR civil penalty itself is a Title 31 matter and is not directly affected, but the income-tax-side penalties and interest are.
Taxpayers currently under examination or in collections
If you are in an open exam, a collection due process matter, or an active installment agreement on a 2019 through 2022 year, penalty and interest assessments inside the disaster window are still in play. Our tax controversy attorneys coordinate the Kwong filing with the existing matter so the protective claim does not cut across an open negotiation.
Pending offers in compromise
A successful Kwong recovery reduces the underlying liability and can change the reasonable collection potential analysis on a pending OIC. This needs to be modeled before filing, not after.
Trust fund recovery penalty assessments
IRC §6672 trust fund recovery penalties have their own assessment mechanics and SOL rules. They require a separate analysis, but the assessment dates and amounts often sit squarely inside the window, and the math frequently justifies a filing.
Why a protective claim may make senseis the only move right now
The IRS appeal does not pause the IRC §6511 refund statute of limitations. Even if the Federal Circuit affirms Kwong tomorrow, taxpayers who did not file by July 10, 2026, may will be out of options or reduced options on the COVID-era penalties and interest still sitting on their accounts. The protective claim preserves your position regardless of how the appeal lands.
The claim itself is filed on Form 843, captioned as a protective refund claim for refund or abatement under Kwong, and pleads two independent statutory grounds in the alternative:
- IRC §7508A(d), the primary ground the Kwong court adopted.
- P.L. 119-64, a separate statutory authority that supports recovery of the same COVID-era penalties and interest. Pleading both grounds on the same form helps to preserve the position even if the appellate courts narrow Kwong on the §7508A(d) theory.
The filing must be on paper, sent by certified mail to the service center that processes your returns, and it must arrive at the IRS before July 10, 2026. There is no electronic filing path. There is no extension mechanism. The deadline is the deadline.
What we do when you retain us for a Kwong protective claim
Our Kwong workflow is built to be fast, accurate, and fully documented to give clients the best chance of a successful claim regardless of how the appeal turns out. When you retain Gordon Law, the engagement runs in five steps:
- Transcript pull and intake. We obtain IRS account transcripts for every potentially eligible year so the analysis runs from the actual transaction codes, not the client’s recollection.
- Year-by-year eligibility analysis. Each penalty assessment (TC 166, 176, 270, 276) and interest assessment (TC 196, 340, 341) is mapped against the disaster window and the §6511 SOL, with refund and abatement amounts quantified separately.
- Form 843 protective claim package. We draft a captioned Form 843 for each eligible year, plead both §7508A(d) and P.L. 119-64, attach the supporting transcript pages, and certified-mail the package to the correct service center.
- Coordination with any active matter. If you have an open exam, CDP, OIC, or Tax Court case, we coordinate the protective claim with that matter so the filings do not work against each other.
- Tracking and follow-through. We monitor the IRS response, calendar any 30-day or 6-month action deadlines, and advise on next steps if the IRS denies the claim or fails to act within six months.
Because the deadline is binding and certified mailing takes time, we are advising clients to have signed engagement letters in place no later than mid-June 2026 to leave room for transcript pulls and the certified-mail timeline.
How Gordon Law can help
We have spent more than a decade representing taxpayers in IRS controversy matters, including complex penalty assessments, international reporting issues, and large-dollar collection cases. The Kwong window is open for a short time only, and the analysis is fact-specific. Every situation is different. For advice on your specific circumstances, speak with a tax attorney before taking action.
Request a Confidential Consultation or call (847) 580-1279 to speak with a tax controversy attorney about a Kwong protective refund claim today.
Frequently Asked Questions
Do I qualify if I already paid the penalties and interest?
Yes, the claim seeks a refund of paid amounts. If the penalties and interest are still unpaid on your account, the claim asks the IRS to abate them. Most filings request both, since many accounts have a mix of paid and unpaid items.
Do I qualify if my return due date was before January 20, 2020?
Possibly. The strongest cases involve return due dates inside the disaster window, but penalties or interest that were assessed inside the window for an older year may also qualify. Our transcript review process addresses this on a year-by-year basis.
Does Kwong abate the underlying tax?
No. The case addresses penalties tied to filing and payment deadlines, and the interest that ran on those penalties and on the underlying tax during the suspended period. It does not erase the tax itself.
What happens if the IRS wins the appeal?
If the Federal Circuit reverses Kwong, the §7508A(d) theory may be limited or rejected. The P.L. 119-64 ground pled in the alternative remains as an independent statutory basis. The protective filing preserves both.
How much does a Kwong protective claim cost?
We quote a flat fee per year based on the complexity of the transcript analysis and the number of assessments at issue. For most clients, the fee is a small fraction of the potential recovery.
