June 18, 2026
Recent court decisions suggest that certain IRS filing and payment deadlines during the COVID-19 disaster period (January 20, 2020 through July 10, 2023) may have been automatically extended, potentially affecting penalties and interest assessed by the IRS.
Taxpayers who paid IRS penalties or interest during this period may have an opportunity to seek refunds if the courts ultimately uphold these interpretations.
A protective claim can help preserve a taxpayer's right to a potential refund, but the deadline to file is expected to be July 10, 2026, making timely action important.
A recent federal court decision has created a significant—and somewhat unexpected—opportunity for taxpayers who paid IRS penalties or interest during the COVID-19 period.
In Kwong v. United States and Abdo v. Commissioner, courts interpreted a provision of the Internal Revenue Code (IRC §7508A) to require an automatic postponement of federal tax deadlines during federally declared disasters. Because COVID-19 was treated as a nationwide disaster, these decisions suggest that many federal tax filing and payment deadlines from January 20, 2020 through July 10, 2023 may have been legally extended.
The government has appealed the Kwong decision, and the law in this area is not yet settled. The outcome of that appeal—and any further appellate review—will ultimately determine whether taxpayers are entitled to relief.
If the courts ultimately uphold these interpretations, it would mean that many returns and payments previously considered late were not late at all—raising questions about the validity of penalties and interest assessed during that time.
Even with the current uncertainty, there is a time-sensitive action taxpayers should consider.
Refund claims are generally subject to strict statutes of limitation. For many taxpayers affected by this issue, the deadline to preserve their right to a refund is expected to be July 10, 2026. If no action is taken before that date, the opportunity may be permanently lost—even if the courts ultimately rule in favor of taxpayers.
To address this, taxpayers can file what is known as a protective claim.
A protective claim does not assert a finalized refund amount or require a fully developed position. Instead, it is a formal filing submitted to the IRS that identifies the issue, preserves the taxpayer’s right to claim a refund, and allows the claim to be perfected later, once the legal landscape is clearer. In other words, it keeps the door open.
Before deciding whether to file a protective claim, there are a few key points to understand:
We will assist those clients where the expected benefit from filing a protective claim meaningfully exceeds the cost of preparing and filing the claim.
Our services include the preparation and filing of the protective claim itself, which is subject to a minimum fee. Because protective claims are preliminary in nature, they are intentionally streamlined. If additional work becomes necessary—such as responding to IRS correspondence, gathering supporting documentation, or further developing the claim—those services will require additional time and billings.
For additional guidance, please contact the Larson Tax Team.
What is a protective claim?
A protective claim is a filing submitted to the IRS that preserves a taxpayer's right to seek a refund while a legal issue remains unresolved. It allows taxpayers to protect their claim before the statute of limitations expires.
Does filing a protective claim guarantee a refund?
No. Filing a protective claim only preserves the right to request a refund. Whether a refund is ultimately granted depends on the outcome of ongoing court cases and IRS determinations.