Court Ruling Opens Door for Taxpayers to Recover Pandemic-Era Penalties and Interest
Event summary
- The U.S. Court of Federal Claims ruled in Kwong v. United States (Nov. 25, 2025) that IRS lacked authority to assess penalties and interest during the COVID-19 disaster period.
- Tax deadlines between January 20, 2020, and July 10, 2023, were automatically postponed under IRC §7508A(d).
- Taxpayers who paid penalties or interest during this period may now seek refunds via Form 843.
- Frost Law is advising affected taxpayers on potential claims before statutes of limitation expire.
The big picture
The Kwong decision challenges the IRS's discretion in administering pandemic-era tax relief, potentially unlocking billions in refunds for businesses and individuals. This ruling underscores the tension between statutory language and administrative flexibility in disaster response. Tax advisory firms stand to benefit as taxpayers rush to reclaim overpaid penalties and interest.
What we're watching
- Regulatory Appeal
- Whether the IRS will successfully appeal the Kwong decision, potentially narrowing refund opportunities.
- Claim Filing Pace
- The speed at which taxpayers file Form 843 to preserve claims before deadlines expire.
- Market Response
- How tax advisory firms like Frost Law capitalize on the ruling to attract new clients.