TAXPAYERS MAY BE ENTITLED TO REFUND OR ABATEMENT OF PENALTIES AND INTEREST ASSESSED DURING COVID-19 PANDEMIC

On November 25, 2025, a Federal Court issued an Order which potentially impacted the manner by which federal tax deadlines imposed during the COVID‑19 emergency period should be interpreted and whether certain penalties and interest were properly assessed.

In Kwong v. United States, 179 Fed. Cl. 382 (2025), the United States Court of Federal Claims interpreted the mandatory disaster-relief postponement provision in Section 7508A of the Internal Revenue Code enacted during the COVID-19 pandemic to apply from January 20, 2020 through July 10, 2023.  That statute permits the Secretary of the Treasury to postpone a taxpayer’s deadline to file his taxes during a period of a natural disaster for the full length of the disaster period, plus an additional 60 days.

President Donald Trump declared the pandemic to constitute a nationwide emergency beginning January 20, 2020, and that period remained in effect until May 11, 2023. Applying the additional 60 days provided for in Section 7508A, the Court in Kwong determined that the postponement period extended through July 10, 2023.  The Court determined that penalties and interest imposed during that time may have been improper.

The Department of Justice has indicated that it will appeal that decision.

It is advised that taxpayers affected by this development consider filing a protective claim for a refund or abatement on or before July 10, 2026.