If you still owe IRS penalties or interest related to tax deadlines during the COVID-19 disaster period, you may have grounds to request abatement—a reduction or removal of unpaid charges. The reasoning in Kwong v. United States may support certain requests, although the legal issues remain unsettled.
A federal disaster declaration was in effect for the COVID-19 pandemic from January 20, 2020 through May 11, 2023. In Kwong v. United States, 179 Fed. Cl. 382 (U.S. Court of Federal Claims, Nov. 25, 2025), the court read Internal Revenue Code § 7508A(d), as it existed when the COVID-19 disaster was declared, to automatically postpone tax deadlines until the end of a federal disaster declaration, plus 60 days. That pushed many tax filing and payment deadlines out to July 10, 2023.
Our earlier article on Kwong was for taxpayers who had already paid penalties and interest and wanted a refund. The deadline to make a protective claim for a refund has passed. However, taxpayers who still have an unpaid IRS balance for a tax years before 2023 may be eligible to make a claim for abatement of some penalties and interest.
Can Unpaid COVID-Era IRS Penalties and Interest Be Removed?
If you still owe the IRS for 2019, 2020, 2021, or 2022, part of your balance likely includes penalties and interest added during the COVID-19 disaster period. If the reasoning of Kwong is upheld, some charges tied to postponed deadlines may have been improperly assessed and could be eligible for removal. Asking the IRS to remove a charge you have not paid is called a request for abatement.
IMPORTANT: The July 10, 2026 deadline applied to claims for a refund of money already paid. If you have not paid the penalties and interest, that deadline generally does not stop you from asking the IRS to remove them. But the IRS will not remove these charges on its own. You must make the request.
What Did the Kwong Case Actually Decide?
Terry Kwong paid penalties for several old tax years and asked the IRS to refund them. The IRS denied his requests in the fall of 2020. A taxpayer normally has two years after a denial to sue for a refund. But Mr. Kwong did not sue until February 2023, more than two years after the denial, and the government asked the court to dismiss the case.
The court disagreed with the government. It held that the statute automatically postponed deadlines for the entire length of the disaster declaration, plus 60 days. So, Mr. Kwong’s lawsuit was timely filed. Kwong builds on an earlier Tax Court case, Abdo v. Commissioner, 162 T.C. 148 (2024), which reached a similar conclusion and struck down the IRS regulation that limited the statute.
It is worth noting what Kwong did not decide. It did not directly rule that penalties and interest charged during the disaster period were not allowed. It follows, however, that if the deadlines were postponed, charges tied to those deadlines should not have been made. That is a strong argument, but not yet settled law:
- Kwong is a trial-level decision that binds no other court. The government has appealed to the U.S. Court of Appeals for the Federal Circuit, arguing that the mandatory postponement lasted only 60 days, ending March 20, 2020. A decision is not expected before 2027.
- The IRS has formally accepted only that 60-day postponement and disputes the rest of the period.
IRS Refund vs. Abatement: What Is the Difference?
- If you already paid the penalty or interest and want it back, you are requesting a refund.
- If the IRS assessed the penalty or interest but you have not paid it yet, you are requesting an abatement, meaning a removal or reduction of the unpaid charge.
Which IRS Penalties and Interest May Qualify for Abatement?
Penalties and interest run from the due date of the return. If the due date for certain tax returns were legally postponed to July 10, 2023, then a return filed or payment made before then arguably was never “late.”
The difference can be significant. Under the reasoning of Kwong, a taxpayer whose filing or payment deadline fell within the postponement period may have grounds to challenge related late-filing penalties, late-payment penalties, or interest.
You may be able to request abatement if you have an unpaid balance on an individual or business tax return, and the IRS charged any of the following between January 20, 2020 and July 10, 2023:
- A failure-to-file penalty
- A failure-to-pay penalty
- An estimated-tax (underpayment) penalty
- Interest
If your balance is from a year before 2019, the question is whether interest on an older debt stopped running during the COVID-19 period. The IRS says it did not. That question is pending in the U.S. Tax Court in Wepplo v. Commissioner, Docket No. 36722-21.
How to Request IRS Penalty and Interest Abatement
Request abatement in writing, generally on Form 843, Claim for Refund and Request for Abatement, using one form for each tax year and type of tax.
Ask for every kind of relief at once. First-time penalty relief and reasonable-cause relief do not depend on the Kwong appeal, and a nationwide disaster is a textbook example of circumstances beyond a taxpayer’s control. A request that leaves out a ground for relief may lose it.
Do not ignore collection notices. If the IRS sends a notice that it intends to levy your bank account or wages, or has filed a tax lien, you generally have only 30 days to request a hearing. That hearing is one of the best places to insist that the IRS verify that every charge on your balance is legally correct.
Frequently Asked Questions
- I did not file anything by July 10, 2026. Is it too late?
Not necessarily. That deadline governed refunds of amounts already paid. Interest and penalty assessments that you have not paid can generally still be challenged. - Will the IRS remove these charges automatically?
No. - Should I pay my balance first?
Not without advice. Paying stops interest, but it turns an abatement request into a refund claim with its own two-year deadline. - How long will it take?
The IRS has taken no public position on these claims, and many will likely wait until the courts rule.
Get Help Reviewing Your Unpaid IRS Balance
If you still owe the IRS for a tax year before 2023, your balance may include penalties and interest that a federal court’s reasoning says should never have been charged, and the July 10, 2026 refund deadline does not end that inquiry. Pull your transcripts, identify the charges inside the COVID-19 period, and ask the IRS in writing to remove them, along with every other form of penalty relief available to you.
For help reviewing your IRS transcripts and deciding whether an abatement request makes sense for you, please call McDowell Law Group at (757) 863-4890 (Virginia Beach, Virginia) or (252) 390-4690 (Kitty Hawk, North Carolina) to schedule a consultation.
This article is provided for general informational purposes only and does not constitute legal or tax advice, nor does it create an attorney-client relationship. The law discussed here is unsettled and subject to change, including as a result of the pending appeal. Deadlines and outcomes depend on your specific facts. Please consult a qualified tax professional about your individual situation before acting.