Are you eligible for potential COVID tax refund? Time is running out

Digital Editor

Tens of millions of Americans may be eligible for some extra cash, but time is running out to file a claim.

July 10 is the deadline to file for potential tax refunds that stem from IRS penalties and interest that some taxpayers paid during the coronavirus pandemic.

A federal court late last year ruled that taxpayers were not required to file their taxes on time during the COVID-19 pandemic.

The IRS assessed more than 120 million penalties against tens of millions of taxpayers for filing late returns, failing to pay taxes or failing to make required estimated tax payments between January 2020 and July 11, 2023.

The case, called Kwong v. U.S., decided that COVID-19 emergency laws extended the deadline to file and that the IRS owes penalty payments to taxpayers.

The government is appealing the ruling, but if the decision stands, millions of Americans could be owed refunds.

Simply put, the IRS may owe money to tens of millions of Americans. But it’s up to you to claim that money.

WHO IS ELIGIBLE?

The following taxpayers should review their records and potentially apply for a refund, according to the national taxpayer advocate, an independent watchdog of the IRS.

• Taxpayers who filed a return during the COVID-19 disaster relief period and were assessed penalties or interest related to that return;
• Taxpayers who paid or still owe penalties or interest for filing or paying late during that period;
• Taxpayers who filed late international information returns; or
• Taxpayers who believe they may have missed a refund, refundable credit, withholding credit, estimated tax payment credit, or other tax benefit for tax years affected by the COVID-19 postponement period.

“Many taxpayers affected by this issue have low and moderate incomes,” the taxpayer advocate said. “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.”

Taxpayers should focus on whether the transcript shows penalties, interest, payments, refund activity, or other account activity from January 20, 2020, through July 10, 2023

HOW TO APPLY

To claim a potential refund, people will need to fill out a Form 843 which can be found on the IRS website.

Typically, the form — also called a Claim for Refund and Request for Abatement form — would need to be filed by paper. But the IRS launched an electronic filing form only for claims related to the COVID refund.

Those who opt to submit the form by paper must note in the submission that it’s related to the Kwong case at the top of the form, according to the IRS.

Because of the impending July 10 deadline, “taxpayers should not delay reviewing their situation and considering potential claims for refund and abatement,” the taxpayer advocate said.