WASHINGTON — Millions of Americans may still be eligible for tax refunds related to penalties and interest charged during the COVID-19 pandemic, following a recent court ruling that could reshape IRS timelines.
Tax attorneys say it may be worth revisiting past tax records, as individuals and businesses could be entitled to refunds if they were charged penalties during the pandemic period.
Court Ruling Could Change Tax Deadlines
Under Section 7508A(d) of the U.S. tax code, tax deadlines must be postponed during federally declared disasters, plus an additional 60 days. A federal court ruled in November that the COVID-19 public health emergency — spanning from January 20, 2020, to May 11, 2023 — qualifies under this provision.
With the additional 60 days, the adjusted deadline for filing tax returns for 2019 through 2022 effectively became July 10, 2023.
As a result, tax experts argue that the IRS may not have had the authority to impose penalties or interest during that extended period. Taxpayers who were charged could now be eligible for refunds.
Millions Could Be Eligible — But Time Is Limited
Although the IRS is expected to appeal the ruling, taxpayers are encouraged to act now.
According to Jon Wasser, a partner at Fox Rothschild, millions of taxpayers could qualify, but failing to file a claim before July 10, 2026, could mean losing the opportunity entirely.
The statute of limitations generally allows taxpayers to file refund claims within three years of filing a return or two years after paying the tax — whichever is later. Based on the revised deadline, July 10, 2026, is now considered the final cutoff.
Who Qualifies?
Eligibility may include:
- Individuals or businesses charged penalties or interest
- Charges incurred between January 20, 2020, and July 10, 2023
Tax experts note that the potential refunds could be substantial, particularly for businesses that faced cash flow challenges during the pandemic and incurred large penalties.
A notable example includes Western Digital, which filed a lawsuit seeking a refund on interest charges it believes were improperly applied during the pandemic period.
How to Check If You’re Eligible
Taxpayers should review their IRS records to determine whether penalties or interest were assessed during the relevant timeframe.
This can be done by:
- Consulting a tax professional
- Accessing IRS tax account transcripts
Tax transcripts include key details such as income, filing status, payments, penalties, and interest charges. These can be accessed online through the IRS Individual Online Account or requested by mail.
How to Claim a Refund
Taxpayers can file a refund claim themselves or through a professional using IRS Form 843.
When submitting the form, experts recommend specifying that the claim is based on the court decision related to Section 7508A(d) and the COVID-19 disaster period.
This type of filing is considered a “protective claim,” which preserves your right to a refund while the legal process continues.
Why Acting Now Matters
Even though the legal battle is ongoing, filing early ensures that taxpayers do not miss the deadline.
Experts emphasize that this step is critical — once the statute of limitations expires, the opportunity to claim a refund is lost, regardless of the final court outcome.