Taxpayers may secure refunds or penalty abatements for COVID-19 period filings if claims are filed by July 10.
The IRS is allowing taxpayers to claim refunds or abatements for penalties and interest assessed between January 20, 2020, and July 10, 2023. The opportunity stems from federal court rulings, including Kwong v. United States, which found certain COVID-era penalties unjustified.
Under normal rules, late filings incur a 5% monthly failure-to-file penalty and a 0.5% monthly failure-to-pay penalty, capped at 25%. The IRS has not disclosed the total potential refund amount but described the situation as a “major refund opportunity.”
Eligible taxpayers must submit claims by July 10 to qualify. No immediate market reaction was reported.