The IRS may owe refunds to millions of taxpayers who received penalty relief during the pandemic. A federal court ruling in Kwong v. United States established that certain taxpayers deserve money back based on how the IRS handled penalty assessments.
The case involves taxpayers who qualified for penalty relief under pandemic-era rules but weren't fully compensated. The IRS initially applied penalties to accounts before removing them, leaving some filers short of the full refund they deserved.
To claim this refund, eligible taxpayers must file Form 843, Claim for Refund and Request for Abatement. This form goes to the IRS office that handled the original return. Taxpayers should include documentation showing they received penalty relief during the pandemic years.
The filing deadline matters. Taxpayers have three years from the date they paid the tax or two years from the date they filed the return, whichever comes later. Missing this window closes the door on the claim permanently.
Who qualifies? Primarily taxpayers who received pandemic-era penalty relief under programs like the First Time Penalty Abatement (FTPA) or reasonable cause waivers. If the IRS removed a penalty from your account between 2020 and 2022, check whether you received the full economic benefit.
The refund amount varies. Some taxpayers may receive hundreds of dollars. Others could see refunds in the thousands, depending on penalty amounts and interest calculations.
The IRS processes these claims through the Refund Section. Response times typically run 6 to 12 months, though complex cases take longer. Taxpayers can track claim status using IRS.gov or by calling the IRS at 1-800-829-1040.
Gather your original penalty notice, the abatement letter from the IRS, and your tax return for the year in question.