Kwong v. United States: Could You Be Eligible for an IRS Penalty or Interest Refund?

At Alloy Silverstein, we’re closely tracking developments that may create meaningful tax savings opportunities for clients. The recent Kwong v. United States decision is one of those developments. For some taxpayers, it could create an opportunity to recover penalties or interest related to the COVID-19 filing and payment period.

What is Kwong v. United States?

Kwong v. United States is a recent federal court case that examined how special IRS disaster-relief provisions were applied during the COVID-19 pandemic. The court concluded that certain tax filing and payment deadlines may have been automatically extended for a longer period than many taxpayers and practitioners previously understood. As a result of the court’s decision, some penalties and interest assessed during that time may have been applied incorrectly, potentially creating refund or abatement opportunities for affected taxpayers.

Potential claim deadline: July 10, 2026

Although the law is still developing, July 10, 2026, may be an important deadline for preserving certain claims or requesting a refund or abatement. Our tax team is actively monitoring this area and evaluating whether the ruling may be relevant based on your individual circumstances.

Why this matters

During the COVID-19 declared emergency, special disaster-relief rules postponed certain tax filing and payment deadlines. In Kwong, taxpayers who paid certain penalties and interest – or still have unpaid assessed amounts from that period – may want to review whether relief is available. This issue may apply to a wide range of taxpayers, including individuals, businesses and trusts/estates.

Items worth reviewing

• Failure to file and pay penalties
• Certain estimated tax penalties and interest

Important reminders

• There may be a limited‑time opportunity to recover penalties and interest paid during the pandemic.
• The IRS will not issue refunds automatically.
• Action is required by July 10, 2026, but in some situations, the deadline could be earlier.
• Future guidance from the IRS, legislation, or court cases could change the outcome of this issue.
• We can help you determine eligibility based on your specific facts and circumstances and file protective claims or claims for refund or abatement of penalties and interest where appropriate.

What you can do now

• Review IRS notices and account transcripts for tax years 2019-2022 for penalties or interest tied to late filing, late payment, or estimated taxes.
• Identify any amounts already paid as well as any balances that remain assessed but unpaid.
• Contact your CPA early to determine whether a protective claim or refund request should be filed before the July 10th deadline.

Consult with an Alloy Silverstein Advisor

Please call our office at 856.667.4100 or contact your Alloy Silverstein advisor to discuss whether Kwong v. United States may apply to you. We can help evaluate eligibility, review IRS records, and prepare any appropriate protective claims or refund requests before applicable deadlines. Proactive planning and timely action are often the key to preserving valuable tax opportunities.