Protect Your Potential COVID-19 Disaster Relief Refunds By Filing Formal or Protective Claims for Refund (Part III)

By snapme | May 7, 2026

Don’t miss your refund. Learn how to file Form 843, choose between refund and protective claims, and avoid common mistakes before the 2026 deadline.

As I discussed in Part I of this series, recent legal developments, including the U.S. Court of Federal Claims decision in Kwong v. United States, suggest that some penalties and interest assessed during the nearly 3.5-year COVID-19 federal disaster period may have been improper. Under the reasoning of Kwong, tens of millions of taxpayers may be entitled to refunds or abatements of those amounts. However, this relief will not happen automatically. To protect their rights, most taxpayers must file a claim for refund – generally by July 10, 2026. Missing the deadline means taxpayers risk losing potential refunds – undermining their fundamental taxpayer rights, including the rights to pay no more than the correct amount of tax and to a fair and just tax system.

In Part II of this series, I explained how reviewing tax account transcripts can serve as a practical starting point to determine whether taxpayers may need to take action. In this post, I will explain:

Refund rules and time frames;
The difference between formal claims for refund or abatement and protective claims for refund or abatement;
How to request refunds or abatements; and
Common mistakes taxpayers should avoid.

Understanding Refund Deadlines: Why July 10, 2026, Matters

The law authorizes the IRS to issue a credit or refund when you have overpaid your taxes, including penalty and interest. However, your time to file a claim is limited. If you miss the deadline, you could permanently lose your refund. Generally, you must file a claim for credit or refund before the later of the following dates:

Three years from the date you filed your tax return (including extensions), or
Two years from the date you paid the tax.

Under the reasoning of Kwong, certain filing and payment deadlines may have been postponed during the COVID-19 federal disaster period – from January 20, 2020, through May 11, 2023 – plus an additional 60 days. Under that reasoning, returns and payments due anytime during that window would not have been late until after July 10, 2023. This period covers the standard filing and payment deadlines for many individual income tax returns for tax years 2019 through 2022.

One point that can be confusing is how the three-year rule works when a taxpayer filed a return before the return’s due date. Basically, if the taxpayer filed a tax return before the return’s due date, the early filing date generally does not start the three-year refund period early. Instead, the return is generally treated as filed on the due date. Under the reasoning of Kwong, that due date would be July 10, 2023. For most affected taxpayers, the three-year deadline for a refund claim or protective claim during this federal disaster period for their 2019 – 2022 tax year returns would be postponed until July 10, 2026 (i.e., three years from July 10, 2023). However, if you paid your penalties or interest later, then the two-year period would apply, possibly giving you more time to file a credit or refund claim.

Here are two examples of the refund deadlines under Kwong:

Three-year deadline: A taxpayer files their 2021 income tax return on August 30, 2022, (without an extension), and pays the tax in full upon filing. The IRS assesses failure to file and failure to pay penalties and interest on the amount of tax not paid by April 18, 2022, because it determines the return was late. The taxpayer pays the penalties and interest on October 1, 2022. Based upon the reasoning in Kwong, the 2021 income tax return was not due until July 10, 2023, so the IRS should not have assessed penalties and interest. The taxpayer would have until July 10, 2026 (three years after the July 10, 2023, disaster relief due date of the return) to file a refund claim. This is later than October 1, 2024, which is two years from the date of payment.

Two-year deadline: Assume the same facts as above except the taxpayer does not pay the penalties and interest until July 1, 2025. Under Kwong, the return was timely filed, and no penalties and interest were therefore due. The taxpayer would have until July 1, 2027 (i.e., two years from the date of payment) to file a refund claim, as it is later than July 10, 2026.

Refund Claims, Protective Refund Claims, and Abatement Requests

Taxpayers should understand the difference between a refund claim, a protective refund claim, and an abatement request. A refund claim asks the IRS to return money the taxpayer has already paid.

A protective refund claim asks the IRS to preserve the taxpayer’s right to a refund when the taxpayer cannot yet determine the final amount or entitlement to the refund because the issue depends on a future event. That future event may be the final outcome of litigation, new IRS guidance, or another legal development. An abatement request asks the IRS to remove or reduce an amount the IRS has assessed but the taxpayer has not yet paid.

The distinction matters because refund claims and abatement requests are subject to different rules. The refund deadline under IRC § 6511 generally applies when the taxpayer is asking the IRS to return money already paid. If the taxpayer has not paid the penalties or interest and is asking the IRS to remove or reduce the unpaid amount, the taxpayer is requesting abatement, not a refund.

Choosing Between a Formal Refund Claim and a Protective Refund Claim

The law allows taxpayers to file formal claims for refund or abatement and protective claims for refund or abatement. The guiding consideration is whether you can determine your claim at the time of filing. A formal refund claim is appropriate when you can reasonably calculate the amount you are seeking to recover. In contrast, a protective claim is generally filed when you are unsure of the exact amount of the refund because it depends on how courts ultimately resolve a pending legal issue – in this case, the Kwong issue. In either case, a timely claim is more important than a perfect one. Claims may be supplemented with additional details, but a missed deadline cannot be corrected.

Filing a formal refund claim does more than preserve your right to recover money, it also provides an important procedural advantage: It establishes a defined path for judicial review if the IRS does not act. If the IRS does not allow or disallow your claim within six months, taxpayers generally have the right to file a lawsuit in federal court, including the United States Court of Federal Claims. This prevents a claim from remaining indefinitely within the IRS administrative process without resolution. However, if the IRS disallows a formal refund claim, you have two years from the date the IRS mails the notice of claim disallowance to file a suit for a refund. Once the two-year period expires, the IRS is barred from paying the refund – even if the refund is otherwise allowable – and you may no longer file a lawsuit to litigate the merits.

By contrast, protective claims are typically held in suspense. The IRS generally does not act on them until the underlying issue is resolved, which in some cases may take years. Because the Kwong issue remains pending in the courts and will take time to ultimately resolve, taxpayers will miss the deadline for filing a claim if they wait for final legal clarity. A protective refund claim can be used to preserve refund rights while litigation continues.

In practical terms, a formal refund claim creates a timeline and preserves the option for court review, while a protective refund claim preserves rights but may remain pending until the law is settled.

How to File Refund Claims and Protective Claims for Kwong-Related Issues

Refund claims are traditionally filed using Form 1040 if you have not yet filed your return. If you have already filed your individual income tax return and you need to change things like filing status, income, deductions, credits, dependents, or tax liability, use Form 1040-X, Amended U.S. Individual Income Tax Return. These forms would be used to adjust your underlying tax liability. While this blog is focused on individuals, some businesses are potentially affected also and the same logic applies for related business tax returns.

If you are claiming Kwong-related refunds for interest and penalties – and are not revising your underlying tax liability – you should generally File a Form 843, Claim for Refund and Request for Abatement. You should complete the line items and include the tax years and amount of the requested refund. A technical but important distinction: If you have already paid the amounts at issue, you are requesting a “refund.” If the IRS has assessed tax (including penalties and interest) but you haven’t paid it yet, you are requesting an “abatement.”

Unlike a formal claim, a protective claim does not require a taxpayer to calculate the exact amount of the requested refund or request an immediate refund. But there are minimum requirements for a valid protective claim. The relevant IRS’s Internal Revenue Manual (IRM) procedures, IRM 25.6.1.10.3.2.5(2), and IRM 21.5.3.4.7.3 require a valid protective claim to:

Be in writing and signed;
Include your name, address, Social Security number, Individual Tax Identification Number or Employer Identification Number, and contact information;
Identify and describe the legal issue affecting the claim (i.e., Kwong);
Clearly alert the IRS to the basis of the claim; and
Identify the specific tax year or years involved.

Taxpayers will generally need to file a Form 843, write “Protective Refund Claim Pursuant to Kwong Case” or similar language across the top, and fill in as much detail as possible. In most cases, taxpayers must file a separate Form 843 for each tax period and each type of tax. They should not combine multiple years or unrelated issues on one form unless the Form 843 instructions clearly allow it. They should mail it to the IRS service center where the taxpayer would file a current-year return for the tax involved. For an individual income-tax-related matter, that generally means the service center for the taxpayer’s Form 1040 filing address. As discussed above, many taxpayers who have already paid the penalties or interest will need to file the form by July 10, 2026. The claim should clearly state that your claim is based on the COVID-19 disaster relief period and the legal reasoning reflected in Kwong. It should also identify the specific penalties and interest, tax period, and dates at issue. Taxpayers can also file protective claims for abatement of interest and penalties assessed but not yet paid.

Caution: A general statement that merely says, “I reserve my right to ask for a refund later,” is usually not enough. The IRS must be able to tell what issue is in dispute, why the amount cannot be fixed yet, and which year is affected.

The IRS generally delays action on protective claims until the legal issue is resolved and then asks for whatever additional information it needs to allow, adjust, or disallow the claim.

Request for an Abatement

Taxpayers may also use Form 843 to ask the IRS to abate, or remove, penalties and interest that have been assessed but not yet paid. This is different from asking for a refund. A refund claim asks the IRS to return money the taxpayer has already paid. An abatement request asks the IRS to remove or reduce an unpaid amount the IRS says the taxpayer owes. The refund deadline under IRC § 6511 generally applies when the taxpayer is asking for money back. It does not apply in the same way when the taxpayer is asking the IRS to abate unpaid penalties or interest. The IRM explains that a claim to abate interest paid must be filed within the IRC § 6511 period, but a claim to abate unpaid interest is not subject to IRC § 6511. The IRS’s general authority to abate unpaid assessments comes from IRC § 6404(a). Taxpayers should still act promptly, even for abatement requests involving unpaid amounts. Collection activity may continue unless the IRS agrees to suspend or resolve the matter.

Strengthening Kwong Claims

Taxpayers should consider including supporting information where available.

For Refund Claims, include:

A copy of your transcript (with relevant entries identified);
An explanation connecting the penalties to the COVID-19 disaster relief period;
Penalty and interest amounts; and
Copies of IRS notices or correspondence, if applicable.

For Protective Claims:

Focus on clearly describing the legal issue;
Identify the specific penalties and dates at issue;
Identify the affected years; and
Identify the amount if known.

Common Mistakes to Avoid

Here are some common mistakes that cause taxpayers to lose refunds or delay relief:

Missing the deadline. Taxpayers may lose refunds under the three-year/two-year rule if they do not file a timely claim.
Filing a vague protective claim. The claim must identify the legal issue, the affected tax year, and the reason the claim is being filed.
Not having proof of mailing. Consider sending claims via certified mail with return receipt and keep a complete copy of everything submitted.
Sending to the wrong address. Ensure you use the correct IRS filing address.
Combining too many issues on one Form 843. In most cases, taxpayers should file a separate Form 843 for each tax period and type of tax.

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: Taxpayers should be cautious when choosing a tax professional. They should work 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. Taxpayers 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.

As Kwong v. United States continues to generate interest, taxpayers should remain alert to a persistent and growing risk: scams and aggressive marketing schemes that promise quick refunds or guaranteed eligibility. The complexity of the case, combined with evolving legal interpretations, has created fertile ground for bad actors looking to exploit confusion and urgency. These schemes can lead taxpayers to file improper claims, exposing them to audits, repayment obligations, penalties, and interest.

Taxpayers should approach any unsolicited tax-related advice with caution. I urge you to be wary of professionals or promoters promising a guaranteed refund, charging excessing fees, pressuring you to act quickly, or failing to explain the legal basis for the claim. Before filing a protective claim, taxpayers should consult a trusted tax professional, review IRS guidance, and retain documentation supporting your position. Importantly, remember that legitimate relief provisions are grounded in law, not in slick marketing claims.

Conclusion

Filing a refund or protective claim now can preserve rights while the law continues to develop. Waiting for certainty may mean losing the opportunity altogether.

For taxpayers affected by COVID-19 disaster relief postponements, the opportunity to recover penalties and interest may be significant –but it is not guaranteed. The July 10, 2026, deadline is critical, and impacted taxpayers should not wait to evaluate whether they need to file a claim.

Resources

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