Kwong v. United States: A Potentially Significant Expansion of COVID-Era Tax Deadline Relief

Key takeaways

In a closely watched November 2025 decision, the U.S. Court of Federal Claims concluded that certain federal tax deadlines may have been automatically paused during the COVID-19 national emergency potentially from January 20, 2020, through July 10, 2023. If that interpretation is ultimately adopted more broadly, it could create opportunities for some taxpayers to seek refunds of penalties (and possibly interest) that accrued during that period and could also extend certain limitation periods tied to statutory “clocks.” Importantly, this is not a blanket refund ruling; it is one court’s reading of the statute, and the government may continue to challenge the issue. Because refund and litigation deadlines can still expire, affected taxpayers may want to evaluate whether a protective refund claim is appropriate while the law develops.

What happened in Kwong?

In Kwong v. United States, the taxpayer sued the federal government for a tax refund after the IRS denied a refund claim. The government argued the lawsuit was filed too late because, under Internal Revenue Code Section 6532, a taxpayer generally has two years to file a refund suit after the IRS mails a notice disallowing the refund claim.

The taxpayer responded that the two-year clock was paused during the COVID-19 “disaster period” under Code Section 7508A (the disaster-relief statute that can postpone tax deadlines). The court agreed. The court held based on pandemic-era amendments, certain federal tax deadlines were suspended for the length of the COVID disaster period, January 20, 2020 through May 11, 2023, plus an additional 60 days, potentially carrying the suspension through July 10, 2023.

How this could impact your business or personal taxes

1) Potential refund opportunities for penalties (and possibly interest)

If a deadline is legally suspended, amounts that depend on that deadline, such as certain late-filing and late-payment penalties, may not be valid for the suspension window. Depending on the specific facts, taxpayers who paid penalties (and, in some circumstances, interest tied to a delayed act) during the January 2020July 2023 period may want to evaluate a refund claim. Examples of penalties and interest that would be eligible for a refund claim:

Failure-to-file penalties

Failure-to-pay penalties

Interest or additions to tax that accrued because a payment or filing was treated as late

2) Possible extensions of limitation periods and other “statutory clocks”

Many tax rights and obligations are governed by strict statutes of limitationdeadlines to file a claim, make an election, or bring a lawsuit. Kwong involved the deadline to file a refund lawsuit, but the reasoning could be raised in other contexts where a deadline is tied to a statute rather than an IRS notice.

Deadlines to file administrative refund claims (depending on the type of tax and the specific limitation period)

Deadlines to file or perfect certain tax elections that are time-limited by statute

Deadlines to bring refund litigation in court after an IRS disallowance

Other time-sensitive acts where the governing rule incorporates a statutory limitations period

Why the court’s reasoning is notable, and might be contested

During COVID, the IRS issued guidance postponing selected deadlines for limited time windows. In Kwong, the government argued that these IRS postponements reflected the intended scope of COVID-related relief and that taxpayers should not be able to claim a multi-year suspension for broad categories of deadlines.

The court disagreed, emphasizing that Congress’s statutory language (as amended for the pandemic) can operate automatically, and that the length of the suspension is driven by the disaster period itself (plus 60 days). That said, this is a trial-level federal court decision. Other courts could interpret the statute differently, and the government may seek review in future cases.

What should taxpayers consider?

Identify exposure/opportunity. Review whether you were assessed (or paid) meaningful failure-to-file or failure-to-pay penalties, or significant interest that turned on late timing, between January 20, 2020, and July 10, 2023.

Pull the paperwork. Gather IRS notices, account transcripts, penalty computations, and proof of payment so you can tie amounts to specific periods and statutory deadlines.

Evaluate deadlines to claim a refund. Refund claims have their own limitation periods that can be complex. If there is any doubt about timing, discuss whether to file a protective refund claim to preserve your position while courts sort out the scope of Kwong.

Expect pushback. The IRS may deny claims based on a narrower interpretation, which can require administrative appeals or litigation to resolve.

Conclusion

Kwong is an important reminder that COVID-era disaster relief may have effects that extend well beyond the specific IRS postponement notices many taxpayers relied on. If the decision’s interpretation is adopted more broadly, some taxpayers could have meaningful opportunities to recover penalties (and possibly interest) and to benefit from extended statutory deadlines. Because time limits can expireand because the law is still developingtaxpayers should review their situation with a qualified tax professional to determine whether a protective filing or other action is warranted.