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By Amanda Greenwood
Associate News Editor
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Millions of Americans could be eligible for significant tax refunds tied to the COVID‑19 pandemic—but a federal taxpayer watchdog is warning that many may never claim the money unless they act quickly.
The National Taxpayer Advocate, an independent watchdog within the Internal Revenue Service, has said "tens of millions" of taxpayers may be entitled to refunds or reductions or cancellation of penalties and interest assessed by the IRS during the pandemic. The issue stems from ongoing litigation over whether federal tax filing and payment deadlines were automatically extended throughout much of the COVID-19 national disaster period.
However, the relief is not automatic, and most taxpayers will need to file a formal refund claim before July 10, 2026, to preserve their rights.
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With the deadline now just days away, taxpayer advocates are warning that eligible Americans could miss out on potentially significant refunds if they fail to act before the filing window closes.
Why Refunds May Be Owed
The issue comes from a growing legal dispute over how tax deadlines were handled during the COVID‑19 national emergency.
Under federal law, tax filing and payment deadlines can be postponed during a declared disaster, plus an additional 60 days. Courts have since determined that the COVID‑19 disaster period lasted from January 20, 2020, through May 11, 2023—extending to July 10, 2023, for tax purposes.
A key ruling in Kwong v. United States (November 2025) found that this extension may have been broader than the IRS originally applied.
According to the NTA, that interpretation suggests the IRS "should not have assessed penalties for late filing or payment during that 3.5-year period," nor charged interest on those amounts. As a result, taxpayers who paid penalties or accrued interest between January 20, 2020, and July 10, 2023, could now be eligible for refunds.
Who May Qualify
Eligible taxpayers may include:
- Individuals or businesses who paid late filing or payment penalties between January 2020 and July 2023
- Those who accrued interest on unpaid taxes during the pandemic window
- Taxpayers who paid those charges rather than having them waived
The issue spans a wide range of filers, from individuals and small business owners to large corporations.
Deadline and What to Do
The deadline to file a claim is Friday July 10, 2026.
To request a refund, taxpayers must typically submit IRS Form 843, which is used to claim refunds or abatements of penalties and interest. Experts say filing a claim—even while litigation is ongoing—can protect a taxpayer’s right to a refund if courts ultimately rule in favor of taxpayers.
Why Many Could Miss Out
Despite the potentially large payouts, the NTA warns that millions may lose out simply because they are unaware of the opportunity. The process is not automatic and currently requires paper filing in many cases, which adds another barrier.
It cautions that, without further action from the IRS or Congress, the situation could unfairly benefit those with professional tax advice over those without—creating what’s being described as a system that favors "the well advised over the unaware."
What Happens Next
The legal landscape remains unsettled. The U.S. Department of Justice is expected to appeal the Kwong decision, meaning the outcome is not guaranteed.
Still, tax experts urge eligible taxpayers to act now rather than wait. Failing to file before the July deadline could mean permanently losing access to any potential refund—even if courts ultimately side with taxpayers.
What This Means for You
Missing it could mean losing the money for good. You may be owed money if you paid IRS penalties or interest during COVID.
You must actively claim it—refunds are not automatic. The deadline is this Friday, July 10, 2026.
Update 7/7/26, 4:43 a.m. ET: This story has been updated with further information.
Contact Newsweek editors on this story: John Fitzpatrick, Edward Pearcey and Tony Phillips
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