You May Be Entitled to COVID Tax Refunds

The IRS may owe you money. You have until July 10 to submit a refund claim for penalties or interest the IRS assessed during the COVID-19 pandemic.

The Supreme Court ruled earlier this year that the IRS wrongly assessed fees during the the 60-day extension following the end of the end of the federally declared disaster. Tens of millions of Americans may be affected by the ruling and be owed money, according to the National Taxpayer Advocate, a government office.

“This issue is widespread and not limited to a small or specialized group of taxpayers,” the agency wrote on its website.

If you paid interest or penalties to the IRS during the federally declared disaster period and through July 10, 2023, you may be entitled to a refund. Here’s what you need to know and how to find out if you qualify for a refund.

What Happened?

In February, the Supreme Court ruled in Kwong vs. United States that the IRS could not assess interest on underpayments or other penalties until 60 days after the end of a federal disaster period.

A federal disaster declaration was in effect from January 20, 2020, through May 11, 2023. The 60-day rule extended the deadline to July 10, 2023. However, the IRS assessed fees during that time.

Who is Eligible?

Anyone who paid interest or penalties assessed during the disaster period through July 10, 2023, may be subject to a refund. This could include late fees, interest that began accruing earlier than it should have and overpayment interest.

Officials say the best way to find out if you qualify is to review your 2020, 2021, 2022 and 2023 tax records to see if you were charged these fees.

How to File a Claim

Taxpayers must file claims on or before July 10, 2026 using Form 823, Claim for Refund and Request for Abatement. If you don’t file a claim by the deadline, you may become ineligible for the refund.

Katie Sartoris is a Certified Educator in Personal Finance and an award-winning journalist with a decade of reporting and editing experience in the industry. She joined the Penny Hoarder from Gannett, where she was a local news editor in Central Florida. Katie lives in Leesburg with her husband and cats, and is working on restoring and updating her original mid-century home.