IRS May Owe Millions in Pandemic Tax Refunds

A recent court ruling could open the door for millions of Americans to claim a tax refund related to the pandemic. The U.S. Court of Federal Claims ruled in November 2025 that federal tax deadlines should have been extended throughout the entire pandemic period, from January 20, 2020, to May 11, 2023, plus an additional 60 days, as mandated by tax code Section 7508A(d) for federally declared disasters.

Potential Refunds for Late Filers and Penalty Payments

In simpler terms, this ruling suggests that tax filing deadlines from 2019 to 2022 should have been extended to July 10, 2023. Consequently, anyone who filed before this extended date and incurred late penalties or fines might be eligible for a refund or penalty abatement. Tax experts are urging eligible individuals to file their claims promptly due to legal limitations on refund claims.

Jon Wasser, a partner at Fox Rothschild specializing in tax issues, advised, “Millions of taxpayers could be eligible, but if people don’t file claims before July 10, 2026, they lose out on the potential for a refund or abatement.” The IRS is likely to appeal this decision, making the July 10, 2026 deadline crucial for preserving one’s claim.

Precedent Set by Previous Lawsuits

Pandemic refund claims have seen success in court before. In February 2025, digital storage solutions firm Western Digital filed a lawsuit against the federal government seeking a partial refund of a $53.6 million tax payment submitted in August 2023. The company argued it should not have been charged nearly $21 million in interest, as its filings occurred during the disaster period.

This lawsuit aligns with sentiments expressed by Jessica Marine, a partner at Frost Law, who noted the potential significance of these refunds. “The potential dollar amounts could be significant, particularly for businesses that faced liquidity challenges during the pandemic and incurred substantial failure-to-pay (taxes) penalties,” Marine wrote in a blog post.

How to File a Protective Claim

To determine eligibility for a refund, taxpayers should check their records for any penalties or interest levied by the IRS during the tax filing pause. This information can be obtained from tax professionals or by requesting a tax transcript from the IRS website, via mail, or by calling 800-908-9946. Tax professionals and individuals can file claims using IRS Form 843, “Claim for Refund and Request for Reduction,” referencing the Kwong v. United States decision and the COVID-19 disaster period. This “protective claim” essentially notifies the IRS of a potential refund pending the case’s final determination.