Delaware taxpayers who received penalties from the Internal Revenue Service during the COVID-19 pandemic may be entitled to get their money back, but time is running out to file a claim.
Millions of Americans who were hit with fines for late tax filings or missed payments between January 2020 and July 11, 2023, could qualify for refunds or penalty cancellations following a recent federal court decision. The relief isn’t handed out automatically, though – most people must submit paperwork by July 10 to recover their funds.
An independent IRS watchdog, the national taxpayer advocate, is sounding the alarm about the approaching deadline after a court ruled late last year that taxpayers weren’t obligated to meet standard filing deadlines during the coronavirus crisis.
The tax agency imposed over 120 million penalties on tens of millions of people for submitting late returns, missing payment deadlines, or skipping required estimated tax payments throughout the pandemic period.
The legal case, known as Kwong v. U.S., determined that COVID-19 emergency legislation pushed back filing requirements and that the IRS must return penalty money to taxpayers. Legal proceedings in the case continue.
The taxpayer advocate describes the situation as “widespread and not limited to a small or specialized group of taxpayers.”
Ken Kies, assistant secretary at the Treasury Department, shared with The Associated Press that President Donald Trump’s Republican administration considers Kwong “was wrongly decided because it is a misreading of the plain language of the statute.”
“We will continue to defend the statutory language as written,” he stated.
Despite the administration’s position, taxpayers should complete the necessary paperwork to protect their interests, according to Alyssa Maloof Whatley, a director at Frost Law, a tax firm operating nationwide.
“Either it holds up or it doesn’t,” she observed regarding the court decision. “So by preserving your claim, you’re actually preserving your right to that money.”
Those who may receive refunds or penalty eliminations include individuals who submitted tax returns after deadlines between Jan. 20, 2020, and July 11, 2023; paid fines for late filing or payment during that timeframe; face outstanding IRS penalties whether paid or not; or filed international information returns past their due dates.
Through multiple blog entries on its website, the taxpayer advocate offers guidance – including suggestions that people examine their IRS tax account records through online portals – to verify penalty charges from those time periods.
“Many taxpayers affected by this issue have low and moderate incomes,” the taxpayer advocate noted. “These taxpayers are less likely to have professional representation and to learn about complex legal developments like this one. As a result, they face a greater risk of missing the opportunity to claim refunds to which they may be entitled.”
Maloof Whatley explained that individuals must complete Form 843, available on the IRS website, and mail it through postal service.
The IRS states that people who received pandemic-era penalties must send the form to the service center where they would normally file their current tax returns.
Given the approaching July 10 cutoff, “taxpayers should not delay reviewing their situation and considering potential claims for refund and abatement,” the taxpayer advocate urged.
