Many businesses that claimed the Employee Retention Credit (ERC) later filed amended income tax returns to reduce wage deductions as required by law.
Those amended returns often resulted in additional tax liabilities, and many business owners subsequently paid IRS penalties and interest.
A recent court decision, Kwong v. United States (U.S. Court of Federal Claims, Nov. 25, 2025), may provide a path for some taxpayers to seek refunds or abatements of penalties and interest that accrued during the COVID disaster period.
Businesses may want to consider a review if they:
- Claimed the Employee Retention Credit (ERC)
- Filed amended income tax returns adjusting wage deductions
- Owed additional tax because of those amendments
- Paid IRS penalties or substantial interest
The decision is not yet final, and future appeals remain possible. However, many advisors believe taxpayers should preserve their rights by filing protective claims before applicable deadlines expire.
For many taxpayers, the key deadline is expected to be July 10, 2026.
Action Required by June 5 for Trueblaze Clients
Because IRS transcripts must be reviewed before a claim can be prepared, we are asking interested clients to contact us immediately.
If you would like us to evaluate your situation, please email lauren.s@trueblaze.com no later than June 5, 2026, with the subject line: Kwong Review.
Clients who already have access to IRS online accounts will be able to speed up the process by obtaining transcripts directly and providing them to our office.
If your business paid penalties or significant interest after filing ERC-related amended returns, now is the time to determine whether a protective claim should be considered.
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