Our Verdict
Mostly True
The Claim

Claims are circulating that millions of Americans can get refunds from the IRS for tax penalties and interest they were charged during the COVID-19 pandemic.

Are Millions of Americans Owed IRS Refunds for COVID-Era Tax Penalties?

The Claim

Social media posts and news articles claim that millions of Americans may be owed refunds from the IRS for tax penalties and interest charged during the COVID-19 pandemic, and that a deadline is fast approaching to claim the money.

The Verdict: Mostly True

This claim is mostly true, but requires important context. The news is driven by a real, recent federal court ruling — not a new IRS program. Eligibility is specific, filing is required, and not everyone qualifies.

What's Actually Happening

In February 2026, the U.S. Court of Federal Claims issued a significant ruling in the case Kwong v. United States. The court broadly interpreted IRC Section 7508A, a law that requires mandatory postponement of certain federal tax deadlines during presidentially declared disasters — including COVID-19.

The court ruled that FEMA's designation of May 11, 2023, as the end of the COVID-19 pandemic means that tax deadlines falling within the pandemic period may have been legally postponed for over three years. This creates an opening for taxpayers who were charged IRS penalties or interest during that window to file claims for abatement (refund) of those charges.

Who May Be Eligible

Taxpayers who were assessed IRS penalties or underpayment interest for tax years falling within the COVID-19 disaster period (roughly 2020–2023) may have grounds to file a refund claim. This includes individuals and businesses who paid late-filing penalties, failure-to-pay penalties, or underpayment interest charges during that period.

What You Need to Do

Unlike the earlier Recovery Rebate Credit payments (which the IRS sent automatically in late 2024), this relief is not automatic. Eligible taxpayers must proactively file IRS Form 843 (Claim for Refund and Request for Abatement) to seek reimbursement. Tax professionals recommend consulting a tax advisor to assess eligibility before filing.

The Deadline

News reports cite a deadline of July 10, 2026 for filing pandemic-related penalty refund claims. This is based on the standard statute of limitations for refund claims. Missing this deadline may forfeit your right to recover these funds.

Important Caveats

The IRS has not issued official guidance endorsing this interpretation. The ruling in Kwong v. United States is a lower court decision and could be appealed. The IRS may not automatically honor claims based on this ruling. Taxpayers should work with a qualified tax professional before filing. Additionally, this is entirely separate from the COVID stimulus payment (Recovery Rebate Credit) program, which ended in January 2025.

Watch Out for Scams

The IRS warns that it never contacts taxpayers by phone, email, or text to offer refunds. Anyone promising guaranteed pandemic refund money without reviewing your specific tax situation is likely a scam. Always file directly through official IRS channels or a licensed tax professional.

Sources

  1. https://www.irs.gov/newsroom/recovery-rebate-credit
  2. https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments
  3. https://rsmus.com/insights/tax-alerts/2026/us-court-federal-claims-expands-covid-disaster-relief-tax-deadlines.html

Frequently Asked Questions

Are Americans really owed IRS refunds for COVID-era tax penalties?
Possibly yes, for some taxpayers. A February 2026 ruling by the U.S. Court of Federal Claims in Kwong v. United States held that COVID-19 qualifies as a presidentially declared disaster under IRC Section 7508A, meaning certain federal tax deadlines were legally postponed. Taxpayers who were charged penalties or interest during the pandemic period (roughly 2020–2023) may be able to file a claim for a refund of those charges. However, this is not automatic — you must file IRS Form 843 to request the refund, and eligibility depends on your specific tax situation.
What is the deadline to file a COVID-era IRS penalty refund claim?
Tax professionals and news outlets are citing July 10, 2026 as the key deadline. This date is based on the standard statute of limitations for filing tax refund claims, which is generally three years from the original filing deadline. If you miss this deadline, you may lose the right to recover any penalties or interest you were charged. Consult a qualified tax professional as soon as possible if you think you may be eligible.
How do I file a claim for a COVID-era IRS penalty refund?
To file a claim, you must submit IRS Form 843 (Claim for Refund and Request for Abatement) to the IRS. This is not automatic — the IRS will not proactively issue these refunds. You should cite Section 7508A and the COVID-19 presidentially declared disaster as the basis for your claim. Because this is based on a court ruling that the IRS has not officially endorsed, it is strongly recommended that you work with a licensed tax professional or tax attorney who can evaluate your specific situation and prepare the filing correctly.
Is this the same as the COVID stimulus check or Recovery Rebate Credit?
No, these are two completely separate programs. The Recovery Rebate Credit (stimulus payments) was for people who didn't receive their COVID Economic Impact Payments. The IRS automatically sent those payments out in December 2024 through January 2025, and the deadline to claim them was April 15, 2025 — that program is now closed. The current news is about a different issue: refunds of IRS tax penalties and interest that were charged during the pandemic, which is based on a new 2026 court ruling.
Could this COVID penalty refund claim be a scam?
The underlying legal basis — the Kwong v. United States court ruling — is real. However, scammers frequently exploit legitimate tax news to defraud people. The IRS will never call, email, or text you to offer a refund. Be wary of anyone charging large upfront fees, guaranteeing a refund without reviewing your records, or claiming to have a "special connection" to get your money faster. Any legitimate filing goes through official IRS channels using Form 843. Always verify a tax professional's credentials before engaging their services.
Has the IRS officially confirmed these COVID penalty refunds will be honored?
Not yet. As of March 2026, the IRS has not issued any official guidance or press release endorsing the Kwong v. United States ruling or committing to honor refund claims based on it. The ruling came from the U.S. Court of Federal Claims, which is a lower federal court — the IRS or the Department of Justice could appeal it. The IRS's official coronavirus tax relief page (irs.gov/coronavirus) does not reference this ruling. This legal uncertainty is exactly why consulting a tax professional before filing is essential.
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