July 10 Deadline for Filing Protective Refund Claims for COVID-Era Penalties is Fast Approaching

Many clients may wish to consider filing protective refund claims with respect to interest and penalties assessed during the COVID-19 pandemic. By way of background, under IRC Section 7508A, the IRS is entitled by law to postpone various deadlines during federally declared disasters. Under the law, relevant deadlines are postponed for the duration of the presidentially declared disaster period plus 60 days. During the COVID-19 pandemic, the president declared a nationwide disaster that lasted from January 20, 2020, until May 11, 2023. Counting the 60-day additional period, deadlines were potentially extended until July 10, 2023. Recently, the U.S. Court of Federal Claims in Kwong v. United States sided with a taxpayer, finding that various deadlines were automatically extended for the entire duration of the disaster period, plus 60 days—meaning that the statute of limitations did not begin to run until July 10, 2023. Taxpayers may wish to file protective refund claims in order to protect and preserve their right to refunds should the Kwong decision stand. A protective refund claim effectively "freezes" the statute of limitations that applies in your case. Given the court's interpretation, the deadline to file a protective claim would be July 10, 2026. For more information on COVID-era relief, visit Tax Facts Online. Read More: Link to Q8555.