The COVID-19 pandemic spurred the federal government to provide emergency relief, including measures to pause tax deadlines. In the years since, the IRS took a narrow view of how far those measures extended. Recent court decisions, however, have potentially challenged that position, and the results could indicate potential refund opportunities.
If your business or personal taxes resulted in penalties or interest charges related to any point between January 20, 2020 and July 10, 2023, there may be a legal argument that some or all those charges were improperly assessed and may be refundable. It is important to know that time is of the essence; taxpayers may only have until July 10, 2026 to act.
Forvis Mazars Insight: Unlike many tax deadlines that can be extended or worked around, the deadline to file a refund or abatement claim with the IRS is usually firm.
Can the IRS Refund Penalties & Interest Charged During the COVID-19 Pandemic?
The Internal Revenue Code (IRC) imposes penalties on taxpayers who fail to timely file a required tax return or who fail to timely pay taxes due.1 These charges were frequently assessed automatically throughout the COVID-19 years, often without any consideration of whether the underlying deadlines had actually been legally extended by the federal disaster declaration.
The IRS has legal authority to abate penalties and interest that were wrongly charged, but taxpayers must proactively request it.2 The courts are now saying that COVID-era assessments may have been improper, providing taxpayers with a potential opportunity to claim a refund.
The law, however, provides a limited window to make a claim, generally three years from when you filed your return or two years from when you paid.3 Once that deadline passes, the right to a claim may be permanently gone.
Forvis Mazars Insight: If your business filed amended returns during the pandemic years in connection with Employee Retention Credit (ERC) claims, there is a good chance that penalties or interest were assessed in the process.
Did the IRS Wrongly Charge You Penalties & Interest During the COVID-19 Pandemic?
At the crux of this discussion is an IRC provision enacted by Congress specifically to protect taxpayers when a federal disaster makes it difficult to meet their tax obligations on time.4 Congress significantly strengthened the provision in 2019, requiring that when the President issues a federal disaster declaration, certain tax deadlines are not merely extended at the IRS’ discretion; they are automatically and legally suspended for the entire duration of the disaster period, plus an additional 60 days. Therefore, when COVID-19 was declared a national emergency in January 2020, this provision was triggered, and it remained in effect until the federal disaster designation formally closed on May 11, 2023, pushing the total relief period through July 10, 2023.
What Do Recent Court Rulings Mean for Taxpayers Who Paid IRS Penalties & Interest During the Pandemic?
Abdo v. Commissioner,5 was decided by the United States Tax Court in 2024. In that case, the court examined whether the IRS had the authority to limit the scope of mandatory protections through its regulations. The IRS had issued rules attempting to cap the automatic postponement period at one year, effectively cutting off relief that Congress had clearly intended to extend for the full duration of a disaster. The court struck those rules down, finding them inconsistent with the plain language of the statute.
Critically, the court reached that conclusion without relying on the longstanding legal doctrine that courts should defer to a government agency’s interpretation of its own rules, a doctrine that the U.S. Supreme Court dismantled in Loper Bright Enterprises v. Raimondo6 in 2024, making the Abdo ruling even more durable going forward.
Building directly on that foundation, the U.S. Court of Federal Claims issued its decision in Kwong v. United States7 in 2025, applying the Abdo framework specifically to the COVID-19 disaster period. The court confirmed that the strengthened IRC provision (passed in 2019) governed the entire COVID-19 emergency, that the relief period ran continuously from January 20, 2020 through July 10, 2023, and that the IRS’ limited administrative relief fell short of what the law required.
Together, these decisions establish a framework that a taxpayer who paid improper penalties or interest during the pandemic years may support their claim for relief.
Forvis Mazars Insight: The IRS has not yet issued formal guidance responding to either Abdo or Kwong, which means there is currently no administrative fast track for these claims. Every claim must be filed and pursued individually, which takes time. Starting the conversation today is the single most important step you can take.
How Forvis Mazars Can Help
The courts have opened the door to potential refunds for COVID‑era penalties and interest, but that door will not remain open indefinitely. With the statute of limitations looming, taxpayers must act deliberately.
Professionals at Forvis Mazars work closely with clients to identify affected assessments, consider eligibility, and pursue claims. Contact us to learn more.
- 1IRC §6651(a)
- 2IRC §6404
- 3IRC §6511
- 4IRC §7508A as enacted during the period described in this article. Subsequent legislation has modified this section.
- 5Abdo v. Commissioner, 162 T.C. No. 7 (2024)
- 6Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024)
- 7Kwong v. United States, 179 Fed. Cl. 382 (2025)