MW Here's how to find out if you're one of millions of Americans who can claim this IRS refund
Andrew Keshner
Time's running out to file for a COVID-era refund that could get you thousands of dollars back
Here's how to figure out whether you're eligible for a refund from the IRS - and how to claim your money.
People who were hit with IRS penalties during the COVID pandemic might be getting even with the taxman. That could allow them to claim thousands of dollars - or more - in refunds if things shake out their way.
Across the country, law firms, tax-planning advisers and taxpayer clinics are helping clients make their claims.
It's happening more than a month after the tax season ended. What's going on?
A court decision is calling into question the penalties and interest the Internal Revenue Service charged some taxpayers between January 2020 and July 2023, according to experts inside and outside the agency.
That case, Kwong v. United States, centers on a fight between a California businessman and the IRS, but it could impact "tens of millions of taxpayers," IRS National Taxpayer Advocate Erin Collins said in a blog post. The IRS is appealing its outcome.
Litigation could go on for months and likely longer. Yet a key date for taxpayers is coming fast. Circle July 10 on the calendar.
By that date, people need to send the IRS paperwork essentially saying they're entitled to a refund on penalties and interest if the IRS ultimately loses the case. If someone hasn't paid a penalty yet, they could say they were owed an abatement to reduce or eliminate the penalty.
Filing the claim by the July 10 deadline is crucial. "If you don't file it, you're not going to be able to later," said Jessica Marine, a partner at Frost Law.
Her firm has been getting calls daily from people who want to see if they could be in line for money from the IRS. "We're fielding calls every single day from folks. Some have viable claims. Some don't," she said.
Some of the claims have values in the hundreds of dollars, while one recent claim is potentially worth $9 million, Marine said. "It's literally all over the place," she told MarketWatch.
At a time when Americans are closely watching the cost of living, there's extra urgency to claw back money from the government. The potential money at stake is "a big difference for anyone, especially a low-income person," said Omeed Firouzi, a professor at Temple University and director of the law school's low-income taxpayer clinic.
The effort to spread the word on the case is widespread. A spokesperson for Intuit $(INTU)$, the maker of TurboTax, told MarketWatch it has been reaching out to customers who might be eligible for relief under the case and letting them know their options.
People who believe they're eligible for one of the refunds need to complete one tax form soon, mail it and then cross their fingers and wait. That sounds simple, but it's not as straightforward as it could be. The potential refunds, additionally, present opportunities for scammers if people aren't careful.
Here's the payback playbook.
Step 1: Confirm you've been hit with penalties
When earthquakes, floods, fires and other disasters happen, the IRS commonly suspends all sorts of deadlines for impacted taxpayers. So what happens when a global pandemic occurs? The Kwong case hinges on an early 2020 disaster declaration as the then-novel coronavirus upended everything.
The federal government's disaster declaration ran between Jan. 20, 2020, and May 11, 2023.
In her view, U.S. Court of Federal Claims judge Molly Silfen said tax-filing and payment deadlines were postponed during that time, plus another 60 days, which would have concluded on July 10, 2023. That meant timelines for certain penalties for slip-ups like failing to file taxes were also suspended.
This makes July 10, 2026, the red-letter day because taxpayers usually have three years after filing a return to make a claim disputing a penalty, according to Collins.
The potentially reimbursed penalties are for transgressions including failure to file penalties, failure to pay penalties and failure to make estimated tax payments, she wrote.
There could be more penalty payments up for reimbursement, said Marine. "If you had to do something by a certain date in the timeline, it should have been extended," she said.
Penalties related to accuracy and fraud would not be eligible for refunds.
Generally, the timeframe would apply to income-tax returns filed for the tax years 2019 through 2022. People can check something called an IRS tax transcript to confirm whether they were charged a penalty and when. The transcript is a record of dates, including when a return was filed or when a penalty was assessed.
People can get their tax transcript through their online IRS account.
In all likelihood, most people are aware they've been penalized. The IRS notifies households of penalties by a written letter sent through the mail. "Those who have gotten it certainly remember getting it," said Rich Hofmann, executive vice president of tax at Neil Jesani Tax Advisors.
Step 2: Fill out the right tax form - or find a legitimate pro for the job
The next step is filling out the right document, Form 843. It's two pages, and there's a part to explain why the IRS should pay back the money.
People can demand a specific refund amount or can indicate they want a "protective refund" for an amount to be determined later, Collins said.
To claim a potential refund, people need to write "Protective Refund Claim Pursuant to Kwong Case" or similar wording across the top of the form, she said. Be specific with penalty dates and details, she wrote. It doesn't have to be a lengthy narrative. A timely claim "is more important than a perfect one," and people can add details later, she added.
Form 843 cannot be filed electronically. People must mail a hard copy to the IRS service center where they would file their current-year return, Collins wrote.
File this by certified mail and hold on to the receipt, Hofmann advised. "The IRS is not unknown for, perhaps, misplacing mail as it comes in," he said.
It's also a good idea to sign Form 843 with a blue pen instead of black, Marine said. That's because IRS staffers and computers are less likely to raise questions if the form more clearly shows an original signature.
Step 2, Part 2: What to know about finding a pro to help claim your refund
People can complete Form 843 themselves, or they can seek professional help. Look for red flags, though.
Watch out for preparers who insist on being paid a large sum upfront. Many reputable firms are filing claims on contingency, meaning they only get paid if the taxpayer gets paid, Marine said
Beware of preparers who will not sign their name or supply their professional identification number on the form.
Avoid those who purport to guarantee the IRS will pay. "This is not final," said Firouzi. "If they are saying it's definitely happening or making declarative sentences like that, that's something to be concerned about."
Step 3: Hurry up and wait, but don't bank on the money
Once a person completes Form 843 and mails it in, there's one more thing. They'll have to wait for the overall matter to be resolved in the courts. "All these claims will be put in a box and wait until the law is settled," Marine said.
The IRS's opening court papers are due July 20, according to the docket. That's a date for lawyers to watch.
By then, the key date for taxpayers will have come and gone 10 days earlier.
-Andrew Keshner
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 27, 2026 13:10 ET (17:10 GMT)
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