A November 2025 decision from the U.S. Court of Federal Claims has quietly reopened a question most taxpayers assumed was long settled: whether the federal tax deadlines that fell during the COVID-19 pandemic were postponed far more broadly than the IRS ever acknowledged. In Kwong v. United States, 179 Fed. Cl. 382 (2025), the court read the disaster-relief statute to suspend filing and payment deadlines for the entire COVID disaster period — January 20, 2020 through July 10, 2023 — not merely the narrow windows the IRS announced by notice. If that reading holds, failure-to-file and failure-to-pay penalties, estimated-tax penalties, and underpayment interest charged on deadlines inside that window may have been imposed on returns and payments that were not yet late. For many taxpayers, the window to claim those amounts back closes July 10, 2026.
Two ways the Code postpones a tax deadline
Section 7508A gives the government two distinct tools for disaster relief, and the difference between them is the heart of Kwong. Under § 7508A(a), the Treasury Secretary may disregard a period of up to one year in determining whether a taxpayer acted on time — but only if the IRS affirmatively exercises that discretion and announces it. That is the authority behind the familiar pandemic notices: Notice 2020-23, for example, postponed the April 15, 2020 filing and payment deadline to July 15, 2020. Those were deliberate, bounded grants of relief, and for years they were understood to be the whole of the COVID postponement.
Section 7508A(d) is a different instrument. Added by Congress in the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (P.L. 116-94), it creates a mandatory, self-executing postponement: whenever the President declares a federal disaster, qualified taxpayers automatically receive a postponement that requires no IRS action whatsoever. As originally enacted — the version that governs COVID — that mandatory period began on the earliest incident date in the declaration and ran until 60 days after the latest incident date.
The drafting quirk COVID exposed
For an ordinary disaster — a hurricane, a wildfire — the incident period is measured in days or weeks, and a 60-day tail is modest. COVID was not ordinary. The federal disaster declaration described an incident period beginning January 20, 2020 and simply “continuing,” ultimately running until the declaration ended on May 11, 2023. Read literally, § 7508A(d) therefore disregarded the entire stretch from January 20, 2020 through 60 days later — July 10, 2023. Deadlines that fell anywhere inside that window were, by the statute’s own terms, postponed to its end.
The IRS did not read the statute that way. Its regulations treated the mandatory postponement as limited to the acts the Secretary had separately chosen to postpone, and provided that the mandatory 60-day period could never result in more than one year being disregarded (Treas. Reg. § 301.7508A-1(g)). On the Service’s view, the only meaningful COVID relief was the discretionary relief it had announced — the July 15, 2020 postponement and a handful of others.
What Kwong — and Abdo before it — held
The conflict came to a head when Mr. Kwong sued for a refund. The government moved to dismiss the suit as untimely: under § 6532(a), a refund suit generally must be filed within two years after the IRS mails a notice disallowing the claim. Kwong answered that the two-year clock had been suspended during the COVID disaster period under § 7508A(d). The Court of Federal Claims agreed. It held that the statute is mandatory and self-executing, that the entire disaster period plus 60 days must be disregarded, and that the IRS’s contrary regulation misread the statute and was owed no deference after the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo. Because Kwong’s deadline had been pushed out, his February 2023 suit was timely.
Kwong did not arrive in a vacuum. A year earlier, in Abdo v. Commissioner, 162 T.C. 148 (2024), the Tax Court had reached the same core conclusion — that § 7508A(d) is mandatory and self-executing and that the Treasury regulation limiting it was invalid — in the context of a late-filed Tax Court petition. Two different courts, construing two different deadlines, have now read the statute the same way and rejected the IRS’s cap.
What it could mean for COVID-era penalties and interest
If the deadlines inside the window were postponed by statute, then charges computed as though the ordinary deadlines still controlled may have been improperly imposed. That reasoning sweeps in several of the most common pandemic-era assessments:
| Charge | Code section | Why it may be recoverable |
|---|---|---|
| Failure-to-file penalty | § 6651(a)(1) | Accrues from the return due date — which may have been postponed to July 10, 2023 |
| Failure-to-pay penalty | § 6651(a)(2) | Accrues from the payment due date — subject to the same postponement |
| Estimated-tax penalty | § 6654 / § 6655 | Underpayment periods that overlap the disregarded window |
| Underpayment interest | § 6601 | Runs from the (postponed) due date, not the original deadline |
The caveats — and why they matter
This is a promising development, but it is not settled law, and a careful adviser will say so plainly. Kwong is a trial-level decision of the Court of Federal Claims; it is persuasive, not binding, and the government may appeal it to the Federal Circuit. Abdo aligns with it but is likewise not appellate precedent. Just as important, Kwong decided a narrow question — whether one refund suit was filed on time — and did not hold that every penalty or all interest charged during the pandemic was improper. The broader penalty-refund theory is an application of the court’s reasoning, not its express holding, and each claim still turns on its own facts and its own limitations period under § 6511.
The deadline, and the legislative coda
For most affected taxpayers the practical deadline to file a protective claim is July 10, 2026 — three years from the postponed July 10, 2023 date under the § 6511 lookback. The work is straightforward: pull IRS account transcripts for the affected years (roughly 2019 through 2023), identify the failure-to-file and failure-to-pay penalties, estimated-tax penalties, and underpayment interest that accrued inside the window, and file a Form 843 (or amended return) that identifies Kwong as the basis for the claim.
Congress has since addressed the underlying glitch, but not in a way that undoes Kwong for COVID. A later amendment recast the mandatory period as a fixed cap rather than an open-ended tail tied to the latest incident date, but by its terms it applied only to disasters declared after enactment — so it never reached COVID. And in December 2025, Congress enacted the Disaster Related Extension of Deadlines Act (P.L. 119-64) to align disaster postponements with the refund-lookback rules going forward. Neither measure rewrites the version of § 7508A(d) that Kwong and Abdo construed.
The practical takeaway
The conservative course is also the simple one. For any taxpayer who paid federal penalties or interest on a return whose deadline fell between January 20, 2020 and July 10, 2023, a protective Form 843 filed before July 10, 2026 preserves the claim at modest cost. The amounts at stake — particularly underpayment interest and failure-to-pay penalties on large balances — can be substantial. The downside of acting is small; the downside of waiting is the loss of the claim entirely.