Recent cases called Kwong and Abdo have created an important new opportunity for some taxpayers who were assessed penalties or interest, or who may have missed filing or payment deadlines during the COVID-19 disaster period. In simple terms, both cases address how Internal Revenue Code section 7508A should work when a federally declared disaster postpones tax deadlines. The core issue is whether that postponement was automatic and broad, or whether it only applied to the narrower relief windows the IRS announced during the pandemic. Courts in Kwong and Abdo concluded that the former version of IRC § 7508A(d) created a mandatory, self-executing postponement period, rather than one limited solely by the IRS’s narrower administrative notices. A Columbia, MD tax lawyer can help taxpayers determine whether these recent decisions may affect their tax liabilities, evaluate potential claims for penalty or interest relief, and develop a strategy for resolving disputes with the IRS.
Why does that matter? Under the reasoning of these decisions, the COVID-related postponement period may have run from January 20, 2020, through July 10, 2023. If a tax return, tax payment, Tax Court petition, refund claim, or other time-sensitive act had a deadline falling within that period, the due date may have been postponed by statute. That can affect whether failure-to-file penalties, failure-to-pay penalties, estimated tax penalties, information return penalties, and even certain interest computations were properly assessed in the first place. For taxpayers, the practical benefit may be significant. A person or business that paid penalties or interest tied to deadlines inside that window may have grounds to request an abatement or refund. In some cases, taxpayers who assumed a claim was time-barred may still have an argument that the filing period itself was suspended. That said, this is not automatic relief. It generally must be pursued through the proper procedure, and the law is still developing. The government has appealed Kwong and the IRS has not broadly conceded the full implications of Abdo.
The most important immediate issue is deadlines. Taxpayers seeking money back usually must file an administrative refund claim with the IRS before they can go to court. Depending on the facts, that claim may need to be filed under the normal refund limitation rules, often measured by the later of three years from the return filing date or two years from payment. But because these cases involve the very calculation of time, some taxpayers may also have arguments that periods otherwise thought to be closed remain open. The Taxpayer Advocate Service has warned that many taxpayers may need to act on or before July 10, 2026, to protect potential refund rights tied to the COVID postponement period.
Procedure matters just as much as substance. In many cases, the first step is obtaining and reviewing account transcripts, notices, and payment histories to identify exactly what penalties or interest were assessed, for which periods, and by reference to what due dates. From there, the taxpayer may need to file a written refund claim or abatement request that clearly preserves the IRC § 7508A issue. If the IRS denies the claim, or fails to act within the applicable time, further administrative or judicial steps may be available. In refund litigation, additional deadlines apply, including the statute governing when suit must be filed after a notice of disallowance. Kwong itself arose in part from a dispute over whether the deadline to bring a refund suit had been extended by IRC § 7508A.
Taxpayers who still have unresolved IRS matters should also consider whether these decisions affect more than just refunds. If a penalty is still being contested, or if a collection balance includes interest and additions tied to a postponed deadline, the issue may be raised proactively in audit, Appeals, or collection discussions. The same analysis may apply to some unfiled returns or delinquent filings where the government’s position depends on a deadline that arguably fell within the postponement period. Kwong has been cited as potentially affecting not only refund claims, but also whether certain penalties and interest were validly imposed at all during the January 20, 2020 through July 10, 2023 period.
The bottom line is that Kwong and Abdo may offer real relief, but only for taxpayers who move carefully and promptly. These are technical cases involving timing, statutory interpretation, and procedural preservation. For affected taxpayers, the right approach is not simply to assume relief applies or to wait for the IRS to fix the problem on its own. It is to identify the affected years and deadlines, preserve any refund or abatement claims before they expire, and present the issue in a way that protects both administrative and litigation options. For some taxpayers, this may be a rare second chance to challenge penalties, interest, or other delinquency consequences that were once thought final.
Crepeau Mourges has significant experience representing taxpayers in requesting abatement of penalties and seeking administrative refunds. If you are potentially subject to the postponement described in Kwong, call us today to determine if you may qualify for relief and what must be done to preserve your rights.
