White House senior adviser for trade and manufacturing Peter Navarro discusses the big boost in tax refunds from President Donald Trump’s “big, beautiful bill” on Kudlow.
The IRS Taxpayer Advocate has issued a notice that tens of millions of U.S. taxpayers may be entitled to refunds or reduced penalties and interest as a result of the postponement of filing deadlines during the COVID-19 emergency declaration.
The National Taxpayer Advocate said in a post Thursday that refunds or rebates could be available to tens of millions of taxpayers for penalties and interest assessed by the IRS during the 3.5-year period. COVID disaster declaration period.
It explained that the problem arose as a result of recent court decisions, including a ruling in the so-called Kwong case that the tax law’s treatment of federal disaster returns meant filing and payment deadlines were postponed during the period from January 20, 2020 through May 11, 2023.
The taxpayer’s attorney noted that the Justice Department may appeal the decision, but that the relief imposed by the ruling is not automatic and affected taxpayers must file their refund claims by July 10, 2026.
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Tens of millions of taxpayers may be owed refunds or a reduced rebate as a result of the court’s ruling, but they face a summer filing deadline to receive them. (iStock)
“Because disaster is so infrequent, most taxpayers, even most tax professionals, did not anticipate it filing deadlines and payment terms would be postponed for such a long time and that returns and payments would not be considered late and therefore not subject to penalties and interest. But that is the logical extension of what the court held,” the National Taxpayer Advocate wrote.
They further warned that, barring further action by the IRS or Congress to ensure that all taxpayers affected by the ruling get what they are owed, such taxpayers will face a rapidly approaching deadline to file their claims.
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Taxpayers will have to file claims via a paper form before the deadline, barring changes in the IRS process. (Jordan Vonderhaar/Bloomberg via Getty Images)
“Unless the tax authorities or Congress measures to ensure that all affected taxpayers will receive refunds if the Kwong decision is upheld. Taxpayers seeking reimbursement for penalties and interest paid in respect of that period will, in most cases, have to file their claims before July 10, 2026,” the lawyer explained.
“At the risk of repeating myself, my main goal is to reach as many taxpayers as possible and avoid disparate outcomes between ‘knowledgeable’ and ‘unaware’ people,” they said.
That’s what the taxpayer said affected taxpayers may be entitled to a refund or discount on amounts determined during the COVID period for:
- Penalties imposed for failure to file returns on time, failure to pay taxes or failure to make estimated tax payments;
- Interest that started accruing earlier than necessary, or not at all; And
- Overpaid interest for the disaster period 2020-2023.
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According to a recent court ruling, the COVID emergency declaration has delayed filing and payment deadlines. (Tom Williams/CQ-Roll Call, Inc via Getty Images)
The notice warned that the IRS requires Form 843 claims to be made via paper filings, and because such filings may not provide immediate confirmation of receipt, it advised that taxpayers should file claims by mail. registered mail to have proof of their timely submission, in case the forms are lost.
The taxpayer advocate recommended that the IRS adhere to the Taxpayer Bill of Rights and take four steps, including publicizing the issue to taxpayers, providing a six-month filing extension for refund claims, considering systemic waivers so taxpayers do not have to file returns, and creating an electronic filing portal.
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It also called on tax professionals to educate clients about the issue, members of Congress to highlight the issue in communications with their constituents, and for the media to report on it for the public to learn about.
