Did the IRS hit you or your business with tax penalties or interest during the pandemic? There’s a good chance you didn’t actually owe it.
A federal court ruled the IRS wrongly assessed thousands of dollars in penalties against one taxpayer, and that same ruling may apply to millions of Americans. The IRS has already handed back $1.2 billion through automatic relief programs. But those refunds weren’t sent to everyone who qualifies. If you are one of the millions of affected taxpayers that hasn’t been granted relief, the time to act is extremely limited.
If you were charged late filing or payment penalties, or interest that accrued between January 20, 2020 and July 10, 2023, you may be owed a refund. The hard deadline for most taxpayers to claim it is July 10, 2026.
PenaltyBack by TaxNow was built to help you get there.
Most people have only heard about one ruling. There were actually two. And together, they tell a pretty clear story about what the IRS got wrong.
The first came in April 2024, when the United States Tax Court ruled in Abdo v. Commissioner that a section of federal law called IRC §7508A(d) mandates the suspension of tax deadlines during a federally declared disaster. Not optional. Not at the IRS’s discretion. The statute makes it automatic.
Then in November 2025, the U.S. Court of Federal Claims took it further in Kwong v. United States, ruling that the full COVID-19 pandemic qualifies as that disaster, covering the period from January 20, 2020 through July 10, 2023.
What both rulings confirm is that the IRS lacked the legal basis to include those months in its penalty or interest calculations. Every failure-to-file file, every failure-to-pay penalty, all that underpayment interest tied to the disaster window was built on math the courts say could have been wrong from the start.
Think about what that covers: more than three years of returns and payments, from individual 1040s to business filings of every kind, all potentially hit with charges the law says should never have been assessed.
The IRS did give some of this money back. Through Notice 2022-36, it automatically wiped failure-to-file penalties for 2019 and 2020 returns filed before September 30, 2022, at least $1.2 billion worth. A follow-up program, Notice 2024-07, added automatic failure-to-pay relief for 2020 and 2021 accounts under a $100,000 threshold.
The problem is that neither program came close to covering everything the courts say the IRS got wrong. Kwong goes much further than either of those programs did. If your penalties fell outside those narrow windows, the IRS kept your money, even if you legally overpaid.
The IRS decided how much it would return. The courts strongly suggest that wasn’t far enough. If you’re in the gap between what the IRS refunded and what the law actually required, that gap may contain money that belongs to you.
Because nothing about this is automatic. There’s no notice coming in the mail. The IRS isn’t going to reach out. To get your money back, you need to file IRS Form 843, a formal refund or abatement claim, and you need to do it quickly.
In practical terms, July 10, 2026 is the key date for most 2019 through 2022 filings and payments (i.e., those due in 2020 to 2023). You have roughly two and a half months from today.
Hoping for more clarity before you act is a real risk. Once that deadline passes, it doesn’t matter how the courts rule later. The claim expires. PenaltyBack by TaxNow was built specifically for this moment.
Eligibility here isn’t narrow. Whether you filed as an individual, ran a business, or fell somewhere in between, you could have a claim if penalties or interest hit your account during the disaster period. That includes:
The claim types span a wide range of forms: 1040s for individuals, 1120 and 1120S for corporations, 1065 for partnerships, and 940, 941, 943, and 944 for employment taxes. If penalties hit your account during the COVID years and you didn’t see any of that earlier IRS relief, it’s worth finding out whether you were overcharged.
Be aware: the Kwong ruling is likely to be appealed, and nothing is finalized yet. A refund claim isn’t the same as a guaranteed check.
That said, here’s the reality: Abdo has been on the books since April 2024 with no reversal. Kwong applies the same legal logic across the full COVID period. If one ruling gets overturned on appeal, the other doesn’t automatically fall with it.
What matters most: the deadline moves on its own schedule regardless of what the courts are doing. Submitting Form 843 now locks in your right to recover. Skip it, and July 10, 2026 comes and goes whether the appeals are resolved or not. At that point, no court ruling can help you.
Most people can’t easily look at their IRS account history and figure this out themselves. You’d need to know which penalties qualify, which months count toward the disaster period, and how to calculate exactly what was overcharged.
PenaltyBack by TaxNow handles all of it. It scans your penalty history, pinpoints what falls inside the disaster period, runs the numbers on what the IRS may owe you, and lays out exactly what your refund claim would look like, while there’s still time to file.
When the earlier relief programs went out, $1.2 billion went back to qualifying taxpayers. Millions of people who also overpaid got zero, as of today.
You held up your end. If the IRS collected more than it was legally entitled to during one of the most difficult periods most of us have ever lived through, that money may belong to you. Find out what you’re owed while the window is still open.
Visit penaltyback.com for your free check to see if you qualify. It takes minutes, and the deadline won’t wait.
