Millions of Americans could be entitled to money back from the IRS, but they may need to act by July 10 to preserve their claim, according to the National Taxpayer Advocate, the independent organization within the agency that works to protect taxpayer rights.
The timeline follows a federal judge’s November ruling that the IRS should have paused tax filing and payment deadlines while the COVID-19 disaster declaration was in effect, from Jan. 20, 2020, through May 11, 2023. IRS disaster-relief rules typically give taxpayers 60 additional days after such a declaration ends to file returns or make payments, which moved the relevant deadline to July 10, 2023.
In most cases, taxpayers have three years from the date they file a return — or two years from the date they pay a tax, penalty or interest charge — to seek a refund. Because the court found that the filing deadline should have been extended to July 10, 2023, eligible taxpayers now have until July 10, 2026, to submit a refund request or file a protective claim, National Taxpayer Advocate Erin Collins explained in a blog post.
“However, this relief will not happen automatically. To protect their rights, most taxpayers must file a claim for refund – generally on or before July 10, 2026,” Collins wrote.
Who should check whether they’re eligible?
Collins said taxpayers may qualify for a refund if any of the following circumstances apply:
“Taxpayers who may be affected should review their records now and consider whether they need to file a refund claim, an amended return, original return, abatement request or a protective claim,” Collins advised.
A protective claim allows taxpayers to keep their refund rights open while the underlying legal questions continue to be resolved.
How do I claim a refund?
The form taxpayers should file depends on the type of refund they are seeking. Taxpayers who want to claim a refund for penalties or interest they paid the IRS during the disaster period should file Form 843, Claim for Refund and Request for Abatement, Collins wrote.
Because the November court ruling could still be appealed, people who submit the form should write “Protective Refund Claim Pursuant to Kwong Case,” referring to the ruling’s official name, Kwong v. United States, across the top of the form, she said. A protective claim preserves a taxpayer’s right to seek a refund while the legal issue is still being resolved.
Those seeking to change income, deductions, credits, filing status or other items affecting their tax liability should instead file an original or amended return using Form 1040-X for the applicable tax year, Collins explained.
Could the court ruling be overturned?
Because the federal court ruling could be challenged, the law “remains unsettled,” Collins wrote. She expects the Department of Justice to appeal the decision because the government had a narrower interpretation of the postponement statute.
But failing to file a claim before July 10 means taxpayers owed money will lose out on that refund, even if the ruling is upheld, she added.
“Filing a claim does not guarantee relief. But missing the deadline may permanently prevent taxpayers from receiving a refund to which they may ultimately be entitled,” Collins said.
Alain Sherter
