COVID-19 Tax Extensions: July 10 Deadline for Penalty Refunds

If you were hit with IRS penalties or interest on a 2019, 2020, 2021, or 2022 return, COVID-19 tax penalty relief may still be available to you, but the most valuable path closes on July 10, 2026. A November 2025 court decision opened the door to refunds of pandemic-era penalties and interest, and the three-year statute of limitations to claim them is running now. Separate programs, including automatic relief the IRS has already applied to millions of accounts, First-Time Abate, and reasonable cause, cover the situations the court ruling doesn’t reach.

The July 10, 2026 Deadline You Cannot Miss

In Kwong v. United States, the U.S. Court of Federal Claims ruled that IRC §7508A(d) required the IRS to disregard the entire COVID-19 federal disaster period, January 20, 2020 through July 10, 2023, when determining whether filings or payments were timely.¹ Under that reading, failure-to-file, failure-to-pay, and underpayment penalties, along with interest on those penalties, should not have been assessed during that window.

The IRS disagrees, and the Department of Justice is expected to appeal, so the legal question could take years to settle.¹ The refund statute won’t wait. For most taxpayers with 2019 through 2022 tax year returns, the three-year window to claim a refund of pandemic-period penalties and interest expires on July 10, 2026.² Miss the date, and if taxpayers ultimately win in court, you’ll have no way to collect.

How to File a Protective Refund Claim

The National Taxpayer Advocate recommends filing a protective claim to preserve your rights while the litigation continues. It’s a placeholder that tells the IRS you’re asserting a refund right on a legal question that isn’t fully resolved. If taxpayers lose on appeal, the claim goes nowhere. If they win, you’re in line.

Use Form 843, Claim for Refund and Request for Abatement.³ Write “Protective Refund Claim Pursuant to Kwong Case” across the top. File a separate Form 843 for each tax year and each type of tax. A valid protective claim must:²

Be in writing and signed.
Include your name, address, Social Security number or ITIN, and contact information.
Describe the legal issue, referencing the Kwong case and the COVID-19 disaster relief period.
Identify the specific penalties and interest at issue.
Identify each affected tax year.

Vague language like “I reserve the right to ask for a refund later” won’t preserve the claim. The IRS needs the years, the amounts, and the reason the claim can’t be finalized yet. Mail the form to the service center where you’d file a current-year return, and use certified mail with return receipt so you can prove the IRS received it before July 10, 2026.²

Automatic Relief the IRS Already Applied

Before considering other options, check whether the IRS has already waived your failure-to-pay penalty. Notice 2024-7 automatically removed failure-to-pay penalties for qualifying 2020 and 2021 accounts, with no application required.⁴ About 4.9 million individuals, businesses, trusts, and tax-exempt organizations received roughly $1 billion in combined penalty relief across the two years.⁵

You qualified if all three of these were true:⁶

Your assessed income tax for tax year 2020 or 2021 was under $100,000 as of December 7, 2023 (not counting penalties or interest).
The IRS sent you an initial balance-due notice (typically a CP14 or CP161) on or before December 7, 2023.
You accrued failure-to-pay penalties during the relief period, which ran from the date of your balance-due notice (or February 5, 2022, whichever came later) through March 31, 2024.

Two limits matter. The relief covered only the failure-to-pay penalty, not interest on the underlying tax.⁶ And if you already paid the penalty before the IRS processed the waiver, you should have received a refund. If your account transcript doesn’t show the adjustment, call the IRS to sort it out.

First-Time Abate

If the automatic relief didn’t reach you and the Kwong claim doesn’t fit your situation, First-Time Abate is a standing administrative waiver that removes failure-to-file, failure-to-pay, or failure-to-deposit penalties for taxpayers with a clean recent history. It isn’t pandemic-specific, but it works for pandemic-era penalties.

You qualify if all of the following apply:⁷

You filed the same type of return, or weren’t required to file, for the three tax years before the year with the penalty.
You had no penalties during those three years, unless they were later removed for an acceptable reason.
You’ve filed all currently required returns or have a valid extension in place.

Request First-Time Abate by calling the IRS, writing a letter, or filing Form 843. You can ask for it even if you still owe tax. The failure-to-pay penalty may keep accruing on the remaining balance, but once you pay in full you can request relief for the additional accrued amount.⁷

Reasonable Cause Relief

When nothing else applies, you can ask the IRS to remove penalties by showing reasonable cause: proof that the pandemic directly kept you from meeting your tax obligations despite good-faith effort. The IRS evaluates these requests case by case.⁸ Valid reasons include serious personal illness, the death of an immediate family member, natural disasters, and inability to access your records. For COVID-era claims, government-mandated business closures and extended hospitalization are the circumstances that carry weight.

File Form 843 with a written explanation that connects the hardship to the specific dates you missed.³ Cover three things: what happened, when it happened, and how it kept you from filing or paying on time. Attach documentation such as hospital admission and discharge records, death certificates, or copies of the shutdown orders that applied to your business.⁸

The most common mistake is being vague. “The pandemic made it hard” won’t work. The IRS wants a specific chain: you got sick on this date, you were hospitalized until this date, your records were locked in your shuttered office until this date, and that is why the return filed late. Concrete timelines with documentation get approved. Generalities get denied.

Mail the form to the service center listed in the Form 843 instructions, by certified mail with return receipt.⁹ Processing runs from a few weeks to several months. Automated balance-due notices may keep arriving during the review; those come from a separate system and don’t mean your request was denied. If the IRS denies the request, you can ask the Independent Office of Appeals to review it.¹⁰

State Penalties Are Separate

None of these federal programs touch state tax penalties. States set their own filing schedules, and pandemic-era conformity with the federal deadlines varied. Automatic penalty waivers like Notice 2024-7 generally have no state equivalent unless a particular state created one. If you’re still sorting out state penalties from 2020 or 2021, check your state department of revenue’s site for any remaining COVID-era relief or standing abatement options.

1
Taxpayer Advocate Service. Tens of Millions of Taxpayers May Be Eligible for Significant Tax Refunds
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Taxpayer Advocate Service. Protect Your Potential COVID-19 Disaster Relief Refunds By Filing Formal or Protective Claims for Refund
3
Internal Revenue Service. Form 843 – Claim for Refund and Request for Abatement
4
Internal Revenue Service. IRS Provides Penalty Relief for 2020 and 2021 Tax Returns
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Treasury Inspector General for Tax Administration. Nearly Five Million Eligible Taxpayers Received Failure to Pay Penalty Relief Due to the Effects of the Pandemic
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Internal Revenue Service. Notice 2024-7 – Relief from Additions to Tax for Certain Taxpayers’ Failure to Pay
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Internal Revenue Service. Administrative Penalty Relief
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Internal Revenue Service. Penalty Relief for Reasonable Cause
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Internal Revenue Service. Instructions for Form 843
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Internal Revenue Service. Penalty Appeal