A Major Taxpayer Victory — Kwong v. U.S.

In a significant taxpayer victory, the U.S. Court of Federal Claims in Kwong v. U.S. (11/2025) delivered a broad interpretation of disaster relief provisions for taxpayers affected by the COVID19 pandemic. The court acknowledged the practical reality that during a federally declared disaster, taxpayers are rightfully focused on personal safety and reestablishing their lives and businesses, making tax compliance a secondary concern. The court held that the version of IRC Sec. 7508A in effect during the pandemic tolled certain statutory tax deadlines for the entirety of the federally declared disaster period, plus the statutorily mandated 60 days resulting in an automatic postponement period that began on 1/20/20 and ended on 7/10/23.

The Window Is Closing — Act Before 7/10/26

The Kwong decision creates an opportunity for taxpayers who were charged penalties or interest between 1/20/20 and 7/10/23. During this multiyear COVID19 disaster period, penalties and interest charges should not have accrued on missed filing deadlines. Taxpayers who were assessed these amounts but have not paid them can request an abatement. For those who did pay, a refund is possible, but practitioners must act quickly.

Any claim for refund related to the COVID19 pandemic disaster, including claims related to the Employee Retention Credit (ERC), must be filed within three years from the legally recognized deadline of 7/10/23. This means the final day to submit claims to the IRS is 7/10/26. Claims for refund and requests for abatement are filed using Form 843.

To dig deeper, visit the original article on the Thomson Reuters blog.