In news that has flown under the radar, a court ruled that the government should not have assessed penalties for late filings or charged interest on late payments during the global pandemic. And if you did pay, they owe you money, the “Today” show reported.
Here's how the IRS watchdog explained it: “For COVID-19, a federal disaster declaration was in effect from January 20, 2020, through May 11, 2023. Sixty additional days extended the period to July 10, 2023, for tax purposes. Based on the court’s reasoning in Kwong, filing and payment deadlines were postponed during that entire period, and as a result, tax returns and payments due anytime within that window were not late until after July 10, 2023.
"By the court’s logic, the IRS should not have assessed penalties for late filing or payment during that 3.5-year period, nor charged interest on those amounts."
So, lots of people who filed their taxes after what was considered the deadline at that time may be owed money that they didn't know about ... But there's a hitch.
The deadline is looming.
You have to apply for the refund by July 10, 2026, and you must use the Form 843 to see your money. And the Taxpayer Advocate, the largest watchdog group of the IRS, believes tens of millions of Americans are due some money.
To that point, ABC News reported the IRS had 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."
Those taxpayers came from all walks of life and from every income bracket.
"Impacted taxpayers represent a broad cross-section of the public, including individuals, small businesses, large corporations, estates, and trusts. The issue reaches taxpayers with obligations related to income, employment, estate, gift, and excise taxes. It may also affect taxpayers who filed late international information returns, which can result in significant penalties even when no tax is due," the tax expert group wrote on their blog.
HERE is FORM 843, which affected taxpayers must use to get their money. The Taxpayer Advocate suggested the IRS should publicize the court decision and the form, but in the meantime, you can spread the word.
"Taxpayers should not lose their rights simply because they were unaware of a complex legal development – or because the process to protect those rights is too burdensome," the Taxpayer Advocate wrote, adding:
I encourage:
- Members of Congress to highlight this issue in their constituent communications;
- Members of the media to report about it for their subscribers; and
- Tax professionals to make sure their clients are informed.
- Awareness, access, and fairness are essential to effective tax administration.
