However, obtaining this relief is not automatic or assured; most taxpayers must submit a claim for refund or abatement of their tax liabilities by July 10 to receive their refunds.
The national taxpayer advocate, an independent monitoring body for the IRS, is alerting the public that the deadline for applying for this relief is swiftly approaching. A federal court ruled last year that taxpayers were not obligated to file their taxes on time during the COVID-19 pandemic.
The IRS has imposed over 120 million penalties on millions of taxpayers for late filings, failure to pay taxes, or failure to make required estimated payments between January 2020 and July 11, 2023.
The case, Kwong v. U.S., determined that COVID-19 emergency legislation extended filing deadlines and that the IRS owes penalty reimbursements to taxpayers. This case is still under litigation.
The taxpayer advocate has termed this situation “widespread and not confined to a narrow group of taxpayers.”
Ken Kies, the assistant secretary at the Treasury Department, expressed to The Associated Press that the Trump administration believes the ruling in Kwong “was incorrectly decided due to a misinterpretation of the statute’s plain wording.”
“We will maintain our defense of the statutory language as it stands,” he stated.
Currently, it is advisable for taxpayers to complete a form to protect their rights, according to Alyssa Maloof Whatley, a director at Frost Law, a tax firm with offices nationwide.
“Whether the ruling remains in effect or not,” she stated, “by safeguarding your claim, you are ensuring your right to that money.”
Eligible individuals for potential refunds or abatements are those who submitted their tax returns late between January 20, 2020, and July 11, 2023; incurred penalties for late filing or payment during that timeframe; owed IRS penalties, even if unpaid; or submitted international information returns late.
The taxpayer advocate is disseminating advice through a series of blog posts on its website, suggesting that individuals examine their IRS account transcripts online to verify penalty assessments from those periods.
“Many taxpayers affected by this matter have low to moderate incomes,” the taxpayer advocate noted. “These individuals are less likely to have professional guidance and to stay informed about complex legal developments like this. Consequently, they risk missing out on refunds they may be entitled to.”
Maloof Whatley indicated that individuals should complete Form 843, available on the IRS website, and mail it in.
According to the IRS, for those who received a penalty during the pandemic, this form should be sent to the service center where they would file their current year tax return.
Given the approaching July 10 deadline, the taxpayer advocate emphasized that “taxpayers should promptly review their circumstances and contemplate potential claims for refunds and abatements.”
