Important Tax Notice: You May Be Entitled to a Refund of COVID-Era Penalties & Interest
Dear Client,
We want to make you aware of an important recent court ruling that may benefit you.
In Kwong v. United States, the U.S. Court of Federal Claims ruled that certain tax penalties and interest charged between January 20, 2020, and July 10, 2023, were improperly assessed under federal law. This covers tax filings for the 2019, 2020, 2021, and 2022 tax years for both individuals and businesses.
IMPORTANT: A protective claim for refund must be filed with the IRS by July 10, 2026, to preserve your right to a refund.
Here is what we need you to do right away:
Review your records and look through your tax payment history, IRS notices, or bank statements for any penalties or interest paid to the IRS during that January 20, 2020, to July 10, 2023, window. This could include:
- Failure-to-file penalties
- Failure-to-pay penalties
- Underpayment interest
If you find that you did pay penalties or interest during that period, please contact our office as soon as possible. We will prepare and file Form 843 (Claim for Refund and Request for Abatement) on your behalf before the July 10, 2026, deadline.
A few important things to keep in mind:
- This is a protective filing; the U.S. Government has appealed this ruling, and it may be years before a final decision is reached. Do not expect an immediate refund or any acknowledgement from the IRS.
- If you did not pay any penalties or interest during that period, no action is needed.
- Time is short, so please review your records and reach out to us no later than June 15th, so we have adequate time to prepare your filing.
- Our fee to prepare the Form 843 will normally fall between $250 and $500.
We encourage you to also share this notice with family members, business partners, or anyone else who may have paid the IRS penalties or interest during the COVID period.
If you need help finding your IRS payment history, you can view your tax account transcript, including any penalties and interest charged, by logging into your IRS Online Account (for personal taxes) or Business Tax Account (for business taxes). You will need to create an IRS account or log in with ID.me if you have not done so previously.
If you have any questions, please reach out to our office at (301) 698-0795 or tax@bmcaccounting.com.
We appreciate the opportunity to serve you.
Business Management Company, Inc.
