The IRS May Owe You Money from the Pandemic Years—but You Have to Claim It
Recent developments have opened the door for taxpayers to potentially claim refunds from the IRS stemming from the COVID-19 pandemic. Last month, a U.S. Court of Federal Claims decision clarified key provisions within the tax code regarding tax deadlines during disasters.
Understanding the Court’s Decision
The ruling in Kwong v. United States (2025) has significant implications for taxpayers. It revolved around considerations of IRC Section 7508A, which pertains to the postponement of tax deadlines during federal disasters such as the pandemic. Following a February ruling, deadlines for filing tax returns, paying taxes, or requesting refunds were extended to July 11, 2023.
For instance, if a taxpayer was initially required to file their 2020 tax return by April 15, 2021, the revised date would now be July 11, 2023. This shift may have led to incorrect assessments by the IRS regarding penalties, refunds, or interest calculations on refunds. Essentially, the court has indicated that the IRS lacked the authority to impose penalties or interest during the emergency postponement period, which lasted until May 11, 2023, plus an additional 60 days.
What Does This Mean for Taxpayers?
This court ruling implies that taxpayers might be eligible for a refund or have penalties or interest waived if they were improperly charged during the pandemic period, which spans from January 20, 2020, to July 10, 2023.
However, taxpayers should be aware that the IRS and the federal government might appeal this ruling, leaving the outcome uncertain.
How to Determine if You are Owed Money
For individuals who suspect they may be eligible for relief—particularly those who believe they faced unwarranted penalties or interest charges between January 20, 2020, and July 10, 2023—there are steps to take:
- Check your tax records to identify any penalties or interest charged during the relevant period.
- Review your tax account transcript, which is accessible from the IRS.
- Consider filing Form 843 with the IRS to request your refund, using the information retrieved from your transcript.
Notable Legal Actions
Corporate entities are also pursuing their claims. For example, Western Digital initiated a lawsuit last month against the IRS for $21 million, arguing that it was erroneously charged interest during the disaster period.
Individual taxpayers, similarly, should remain vigilant and proactive in examining their financial records for potential refunds. Prompt action in requesting refunds could prove beneficial, particularly as the legal landscape around these rulings evolves.
Conclusion
As a result of the recent court ruling, there may be unclaimed funds waiting for taxpayers who faced penalties or interest due to the IRS’s calculations during the pandemic. It is critical for taxpayers to check their tax records and possibly file for refunds to ensure they receive any money they are owed.
For further information on claiming any potential refunds, taxpayers can refer to the IRS website or consult a tax professional.
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