How to Use IRS Tax Account Transcripts to Identify Potential COVID-19 Disaster Relief Refunds (Part II)

Millions may qualify for refunds on COVID-era penalties and interest. Learn how to read an IRS account transcript to help identify potential refund and abatement eligibility before the July 10, 2026 deadline.

 

 

 

• Tens of millions of taxpayers may be entitled to refunds or abatements of COVID-19 period penalties and interest.
• Relief will not be automatic – most taxpayers must file refund claims by July 10, 2026.
• IRS tax account transcripts can help identify potential refund and abatement eligibility.

 

Who Should Review This?

 

You may be affected if you:

• Filed a tax return late between 2020 and July 11, 2023;
• Paid penalties for filing or paying late during that period;
• Owed IRS penalties even if you have not paid them; or
• Filed an international information return late.

 

Why This Matters

 

As I discussed in Part I of this series, recent legal developments, including the Kwong opinion, may entitle tens of millions of taxpayers to refunds or abatements of penalties and interest that the IRS assessed during the nearly 3.5-year COVID-19 federal disaster period. However, this relief will not happen automatically. To protect their rights, most taxpayers must file a claim for refund – generally by July 10, 2026.

 

It is important to note that this issue is widespread and not limited to a small or specialized group of taxpayers. Impacted taxpayers represent a broad cross-section of the public, including individuals, small businesses, large corporations, estates, and trusts. The issue reaches taxpayers with obligations related to income, employment, estate, gift, and excise taxes. It may also affect taxpayers who filed late international information returns, which can result in significant penalties even when no tax is due.

 

This creates a serious challenge. Many taxpayers may not even realize they are affected by the disaster relief, making it difficult to determine whether action is needed. If taxpayers do not act by that date, they may permanently lose the ability to recover this refund. As a result, taxpayers risk losing potential refunds or abatements – undermining their fundamental taxpayer rights, including the right to pay no more than the correct amount of tax and their right to a fair and just tax system.

 

Practical First Step for Taxpayers

A practical starting point for taxpayers is to review their IRS tax account transcripts. While transcripts can seem complicated, it is not necessary to understand every line. Transcripts provide critical information that can help taxpayers determine whether they should consider filing a protective claim or refund claim. (A protective claim is a way to preserve your right to a refund while legal or factual issues are being resolved by the Courts. (See Part III for a discussion of protective and refund claims.)

 

How Can Taxpayers Get IRS Transcripts?

The fastest way taxpayers can get their IRS transcripts is through their With an online account, taxpayers can immediately view, download, and print their transcripts. Alternatively, taxpayers can request transcripts by mail, which typically takes five to ten days.

Taxpayers who have not registered for online accounts are encouraged to sign up. To access an online account, taxpayers must create an account or login through ID.me. Once verified and authenticated, they can go to the “Records and Status” section, click on “View Tax Records,” and then select “View Transcripts” to see the available transcript options by year.

How an IRS Tax Account Transcript Helps

An IRS tax account transcript provides a timeline of key tax account activity, including:

• When a return was filed;
• When tax was assessed;
• Payments and credits;
• Penalties and interest charged; and
• Refunds issued.

For taxpayers evaluating potential COVID-19 period refunds and abatements, timing is critical. A tax account transcript can help identify whether penalties and interest occurred during the COVID-19 disaster relief period (January 20, 2020, through July 10, 2023).

What Should Taxpayers Look for?

Taxpayers often find their transcripts challenging to understand, so the good news is that they do not need to decode every line on their IRS tax account transcripts for this purpose. Rather, they should focus on dates and transaction entries, paying close attention to entries relating to tax assessments, payments, penalty assessments, interest charges, account adjustments, and refunds. This information helps determine whether the activity falls within the relevant COVID-19 period (January 20, 2020, through July 10, 2023).

Start with these three basic steps:

1. Look for a penalty or interest charge (i.e. penalty for late filing, failure to pay penalty, estimated tax penalty);
2. Note the dates associated with those charges; and
3. Check whether those dates fall between January 20, 2020, and July 11, 2023.

If the above applies, taxpayers may want to explore a refund claim.

For those who want additional help decoding the items on their transcripts, Document 6209, ADP and IDRS Information Reference Guide, explains IRS transaction codes and terminology. Taxpayers should use the version that matches the tax year they are reviewing. For example, a taxpayer reviewing their 2021 transcripts should use the 2021 guide.

Example: Identifying Penalty and Interest Entries

Below is a simplified fictional example of a taxpayer’s account transcript for their 2021 income tax return filed after the original due date. It shows their withholding, a payment sent with the return, failure-to-file and failure-to-pay penalties, interest, and subsequent payments that fully satisfied the balance. The transaction dates show when the transactions occurred.

ACCOUNT BALANCE:                    0.00 ACCRUED INTEREST:                    0.00 ACCRUED PENALTY:                     0.00TRANSACTIONS CODE  EXPLANATION OF TRANSACTION             CYCLE     DATE     AMOUNT 150   Tax return filed                   20224005  10-24-2022     8,400.00 806   W-2 or 1099 withholding                      04-18-2022    -4,700.00 610   Payment with return                          10-24-2022      -700.00 166   Penalty for late filing            20224305  10-24-2022       832.50 276   Failure to pay tax penalty                   10-24-2022       129.50 196   Interest charged                             10-24-2022        58.36 971   Notice issued                                10-24-2022         0.00 670   Subsequent payment                           11-21-2022    -1,200.00 276   Failure to pay tax penalty                   11-21-2022        15.00 196   Interest charged                             11-21-2022        12.41 971   Notice issued                                11-21-2022         0.00 670   Subsequent payment                           12-19-2022    -2,847.77

 

Although this return was filed late under normal tax rules, it was submitted before July 11, 2023. Under the COVID-19 relief rules, it may be treated as timely. As a result, the penalties and related interest shown above may have been charged incorrectly and could be eligible for refund or abatement.

 

An Important Note

 

This is a complex and evolving legal issue. This blog is intended to raise awareness – not to provide legal advice. Taxpayers should review their individual circumstances and consider seeking professional guidance where appropriate.

 

A word of caution: If you decide to seek help, choose your tax professional carefully. Make sure you are working with a reputable accountant or return preparer who has appropriate credentials and a track record of ethical conduct. Be cautious about sharing sensitive personal and financial information, and do not assume that all preparers are equally qualified. You should also be wary of anyone who charges excessive fees, bases fees on the size of your refund, or pressures you to take positions you do not understand. Taking a little extra time to verify who you are working with can help protect both your information and your finances.

 

Conclusion

For taxpayers potentially affected by COVID-19 disaster relief issues, reviewing an IRS tax account transcript is a practical and important first step. While the transcript alone may not resolve the issues, it provides the timeline and account information needed to determine whether the taxpayer may have potential claims.

Because the July 10, 2026, deadline is critical, taxpayers should not delay reviewing their situation and considering potential claims for refund and abatement.

Stay tuned for Part III of this blog series, which will provide guidance on filing claims for refund and protective claims.

Resources

• Transcript types for individuals and ways to order them | Internal Revenue Service
• TAS Tax Tip: Create an Online Account to View Your Balances, Make Payments, Get Transcripts, and More
• Document 6209 – ADP and IDRS information
• NTA Blog – Tens of Millions of Taxpayers May Be Eligible for Significant Tax Refunds – If They Act by July 10 (Part I)
• NTA Blog – Why You Need an IRS Individual Online Account and How to Sign Up
• TAS Help Page: Choosing a Tax Return Preparer

 

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