Are you eligible for the COVID tax refund? The July 10 deadline could cost you an IRS refund forever

Millions of Americans may have closed the chapter on the COVID-19 pandemic, but the COVID tax refund suggests one financial story is still unfolding. This is not another stimulus payment or a newly announced government benefit. Instead, it is a legal dispute that could determine whether some taxpayers paid IRS penalties and interest they should never have owed.

What makes the COVID tax refund especially significant is that many people may not realize they need to act before July 10 to preserve their rights. Sometimes, the biggest financial loss is not paying too much tax. It is missing the deadline to challenge it.

What Is the COVID Tax Refund and Why Could It Matter Years After the Pandemic?

The COVID tax refund could affect a much wider group of taxpayers than many people realize. Individuals, self-employed workers, businesses, estates and trusts that paid failure-to-file penalties, failure-to-pay penalties, estimated tax penalties or IRS interest for tax years 2019 through 2022 may be eligible to file a claim. The issue also extends to some taxpayers who incurred penalties for certain international information returns, even when no tax was due.


The potential refund stems from the 2025 federal court ruling in Kwong v. United States, which held that the COVID-19 public health emergency qualified as a federally declared disaster under the tax code. If that interpretation is ultimately upheld on appeal, tax filing and payment deadlines may have been automatically suspended through July 10, 2023, meaning some penalties and interest assessed during that period may not have been legally owed.

For many taxpayers, July 10, 2026, is the key deadline to preserve their rights because refund claims are generally subject to a three-year statute of limitations from the disputed due date established by the court's interpretation. Taxpayers who believe they were charged qualifying penalties or interest should first review their IRS account transcripts for tax years 2019–2022.

If they appear eligible, they can file IRS Form 843 (Claim for Refund and Request for Abatement), with a separate form required for each tax year. Tax professionals also recommend filing a protective claim if eligibility is uncertain, as doing so preserves the taxpayer's right to a refund while the government's appeal remains pending.

Filing a claim does not guarantee a refund, but failing to act before the deadline could mean permanently losing the opportunity if the courts ultimately uphold the ruling.

Who Could Be Eligible for the COVID Tax Refund Before the July 10 Deadline?

Eligibility for the COVID tax refund generally depends on what happened to a taxpayer's account between early 2020 and mid-2023. Individuals and businesses that paid failure-to-file penalties, failure-to-pay penalties, estimated tax penalties or certain interest charges during the disaster period may have reason to review their records.

The opportunity is not based on income, age or employment. It depends on whether penalties or interest were assessed during a period now being challenged in court.

Tax professionals have been encouraging eligible taxpayers to file what is known as a protective claim before July 10. That advice surprises many people because the lawsuit has not reached a final conclusion. However, tax law often operates on two separate timelines: one determines who eventually wins the case, while the other determines who preserved the legal right to benefit from that victory.

Missing the filing deadline could mean losing the chance to seek a COVID tax refund, even if future court decisions ultimately favor taxpayers.