Tens of Millions May Be Owed an IRS Refund, but Must Act Now To Secure It

A recent court decision in Kwong v. United States held that Internal Revenue Code § 7508A(d) should be applied to the COVID-19 federal disaster period and that most tax penalties or interest paid for the time period should be refunded. So, if you paid IRS penalties or interest on a tax return between January 2020 and July 2023, there’s a real chance the government owes you money back. This isn’t something that will happen automatically, though, and action is required by July 10th.

Tens of millions of taxpayers are impacted by this and should file what is called a protective claim, or their refund opportunity may be permanently lost. To file a claim, Form 843 must be mailed to the IRS (they do not allow this form to be sent electronically) with a postmark date no later than July 10th. You don’t even have to know the exact amount you believe you’re owed in order to file your claim, though fully filling out the form with this information should speed the refund process along.

It may be a while before any refunds are issued. Currently, the court ruling is under appeal and that process could easily take a year, potentially more. The IRS is also not currently well-equipped to handle the time-intensive task of reviewing millions or tens of millions of paper forms and manually issuing refunds.

If you don’t still have access to your returns, you can log in to IRS.gov and examine tax transcripts for tax years 2019-2023 to find out how much you may be entitled to or consult your tax preparer.

You’d think, if the IRS owes you money, that they’d be obligated to just give it to you; unfortunately that is not the case. This situation, like many others involving taxes and the US tax code, highlights the difference between the ‘well advised’ and the ‘unaware’ in how much the IRS takes and keeps of one’s hard earned dollars. If you’d like to become one of the well advised, call 785-330-9292 or fill out the form below to schedule a complimentary strategy session with a financial advisor on our team at Retirement Portfolios in Lawrence.