Tens of millions of Americans may be owed refunds for pandemic-era IRS penalties and interest, following a court ruling that could reshape tax policies. The Kwong v. United States case, decided in November 2023, ruled that automatic tax deadline extensions should have applied during the pandemic, potentially invalidating penalties for late filings or payments. However, the IRS may appeal, leaving the outcome uncertain.

Low- and moderate-income taxpayers are most affected, as they’re less likely to hire professionals to navigate the process. To preserve eligibility, filers must submit claims by July 10, 2026, using IRS Form 843. The advocate for taxpayers, Erin M. Collins, emphasizes that delays could cost individuals thousands in refunds, especially for those who paid penalties during the emergency.

The IRS’s potential appeal complicates the situation, with officials arguing the court misinterpreted the law. Meanwhile, experts urge taxpayers to review their tax transcripts for penalties between 2019 and 2022. Scams targeting vulnerable filers are also a concern, prompting warnings to avoid unsolicited advice.

Act now to secure possible refunds, but proceed cautiously. The case highlights the need for clearer tax guidance during crises, and the IRS’s slow response underscores systemic challenges in addressing pandemic-related financial impacts.