COVID-Era IRS Penalty Refund Claims Still Open — What You Should Do Next
You may have already heard about a possible tax refund opportunity tied to IRS penalties from the COVID years.
Some taxpayers who paid penalties or underpayment interest during 2020–2022 may still be able to recover money. This opportunity is linked to legal interpretations involving Kwong v. United States, and claims may remain open until around July 10, 2026.
But after the initial news, many people are now asking a more important question:
“What should I actually do about it?”
This follow-up guide gives simple CPA-style insights on how to move forward, what mistakes to avoid, and how to check if you may qualify.
Quick Recap: What This Refund Opportunity Is
During the COVID years, many taxpayers:
- Filed late returns
- Paid taxes late
- Received IRS penalties
- Were charged underpayment interest
Because of pandemic disruptions, courts and tax experts have questioned whether some of those charges were properly applied.
As a result, certain taxpayers may be able to file a claim to recover money paid in penalties or interest.
This is not automatic. You must actively review your records and file a claim if you qualify.
Why Many Taxpayers Miss This Opportunity
From a CPA perspective, most missed refunds happen for simple reasons:
1. People forget they paid penalties
Many taxpayers paid penalties years ago and moved on. They do not realize those payments may still matter.
2. IRS notices were lost or ignored
COVID-era mail delays and paper notices mean some people never fully reviewed their IRS account.
3. They assume penalties cannot be refunded
Most people think IRS penalties are final. In many cases, that is not always true.
4. They don’t know how to check records
IRS transcripts are not always easy to understand without help.
Step 1: Check Your IRS Account History
The first CPA recommendation is simple: do not guess—check your records.
You should review:
- IRS account transcripts
- Notices from 2020–2022
- Payment history
- Penalty and interest breakdowns
Your transcript will show exactly what the IRS charged you and when.
If you see:
- Failure-to-file penalties
- Failure-to-pay penalties
- Underpayment interest
You may have something worth reviewing further.
Step 2: Identify COVID-Era Timing
Not every penalty qualifies.
This opportunity focuses mainly on:
- 2020 tax year
- 2021 tax year
- 2022 tax year
These years matter because they were heavily affected by:
- IRS delays
- Office closures
- Processing backlogs
- Emergency tax relief programs
If your penalties fall in these years, they may be worth closer review.
Step 3: Understand That Not Every Case Qualifies
A CPA will be very clear here:
Not all penalties are refundable.
Eligibility depends on factors like:
- Why the penalty was assessed
- Timing of IRS processing
- Type of tax issue involved
- Whether relief rules apply
This is why professional review matters. It is not a simple “everyone gets money back” situation.
Step 4: Don’t Wait Until the Deadline
The expected claim window may remain open until around:
July 10, 2026
But waiting is risky.
Here’s why:
- IRS processing can take time
- Older records may be harder to access
- Corrections may require follow-up documentation
- Many taxpayers will likely file near the deadline
From a CPA perspective, early review is always better.
Step 5: Common Mistakes to Avoid
Many taxpayers lose refund opportunities because of avoidable mistakes:
Mistake 1: Throwing away IRS notices
Old letters often contain key penalty details.
Mistake 2: Assuming software already handled it
Tax software does not always flag penalty refund eligibility.
Mistake 3: Not requesting transcripts
IRS transcripts are the most reliable record of what happened.
Mistake 4: Filing without review
Some taxpayers file claims without checking if they actually qualify.
Why a CPA Review Matters Here
This is not a standard tax refund situation.
A CPA (Certified Public Accountant) can help you:
1. Read IRS transcripts correctly
Transcripts can be confusing. A CPA knows how to interpret them.
2. Identify eligible penalties
Not all charges qualify. A CPA can separate valid vs non-eligible items.
3. Prepare proper documentation
Refund claims often require supporting records.
4. Avoid delays
Incorrect filings can slow down IRS processing.
5. Maximize recovery opportunities
Some taxpayers have more than one eligible year or account issue.
CPA Insight: Who Should Pay Attention First
This opportunity is especially important for:
Small business owners
They often had estimated tax issues during COVID.
Self-employed workers
Income fluctuations led to underpayment penalties.
Investors
Capital gains timing caused unexpected tax balances.
High-income earners
Larger balances often resulted in higher penalties and interest.
CPA Insight: What You Should NOT Do
A professional CPA would also warn against:
Don’t assume eligibility
Many cases look similar but qualify differently.
Don’t rush filings
Missing documents can cause delays or rejection.
Don’t rely on rumors
Always verify with IRS records or a tax professional.
Don’t ignore small amounts
Even small penalties may add up across multiple years.
What a Strong Action Plan Looks Like
If you are serious about checking this opportunity, here is a simple CPA-style plan:
- Pull IRS transcripts for 2020–2022
- Highlight any penalties or interest
- Organize IRS notices and payment records
- Review with a CPA or tax professional
- Determine eligibility for refund claim
- Prepare documentation early
- File before deadline pressure builds
Why This Matters Right Now
Many taxpayers are focused on current tax season issues and forget about past years.
But COVID-era tax years still hold unresolved issues for some taxpayers.
Even if you are unsure whether you qualify, reviewing your records now gives you:
- More time
- Less stress
- Better accuracy
- Higher chance of success
Final CPA Thoughts
The COVID-era IRS penalty refund opportunity is real, but it is not automatic.
It requires:
- Careful review
- Accurate records
- Proper filing
- And often professional guidance
From a CPA perspective, the biggest risk is not missing the opportunity entirely—it is waiting too long or not checking at all.
If you paid IRS penalties or underpayment interest during 2020–2022, now is the time to take a closer look.
A simple review today could uncover money you already paid—and may still be able to get back before the July 2026 deadline.