IRS Penalty Refund Opportunity:Response Needed by June 5

A recent court decision may create an opportunity for taxpayers to recover certain IRS penalties and interest assessed during the COVID-19 disaster period. This applies to taxpayers who paid or were assessed penalties from the IRS between January 20, 2020, and July 10, 2023 – if this is you, read on!

The case, Kwong v. United States (U.S. Court of Federal Claims, Nov. 25, 2025), concluded that certain federal tax filing and payment deadlines should have been postponed throughout the federally declared COVID disaster period. As a result, taxpayers may have grounds to request refunds or abatements of penalties and interest charged on tax obligations due between January 20, 2020, and July 10, 2023.

Potentially eligible charges may include:

• Failure-to-File penalties
• Failure-to-Pay penalties
• Underpayment penalties
• Interest assessed on unpaid tax balances

While the legal process is still evolving, many tax professionals are recommending that taxpayers file protective claims now to preserve their rights.

For many taxpayers, the deadline to preserve a claim is expected to be July 10, 2026.

Action Required by June 5

Before a claim can be evaluated, your IRS account transcripts must be reviewed. In many cases, this requires a signed IRS Power of Attorney and sufficient time for IRS processing.

If you believe you paid penalties/interest during this time and would like our office to evaluate whether you may qualify for a refund claim, please email lauren.s@trueblaze.com no later than June 5, 2026, with the subject line: Kwong Review.

Clients who respond after June 5 may still have options; however, to allow sufficient time to complete our review and filing process before applicable deadlines, getting this moving this week is highly recommended.

If you already have access to your IRS online account, obtaining your transcripts directly will accelerate the process.

If you paid significant IRS penalties or interest related to tax years affected by the COVID period, we encourage you to contact us this week.