How to Remove IRS Penalties from the Pandemic-Era (2020–2023) and Claim a Refund
If you paid IRS penalties during COVID, there is a chance the IRS never should have charged you or your business. You may be able to remove those penalties or claim a refund.
Many taxpayers were charged IRS late-filing and late-payment penalties during 2020 through 2023, even though deadlines were postponed.
A recent federal court decision, Kwong v. United States, suggests that some of those penalties may not have been valid. Taxpayers may still have time to recover that money. Because of this development in the law, now may be a good time to review your situation.
What Changed with IRS COVID Penalty Relief?
During the COVID epidemic, the IRS delayed or postponed multiple tax deadlines. Late penalties should have been suspended (and not charged) before those changed deadlines expired.
In the Kwong case, the judge ruled that these deadlines were suspended from:
January 20, 2020, through July 10, 2023
Penalties included were:
- Failure-to-file penalties
- Failure-to-pay penalties
However, the IRS continued to automatically assess late penalties whenever the postponed deadlines were unclear, not well communicated, or not consistently applied.
Why This Matters
Here is where your opportunity presents. You may have been searching “Can I remove IRS penalties from COVID?”, or “Can I get a refund of IRS penalties I paid?”
In some cases, yes, IRS penalty refunds are available. Still, it depends on timing, qualification for penalty abatement, and how the claim is presented.
Note: The IRS may try to appeal and reverse this decision. However, waiting until after the appeal will cause you to lose your ability to claim this IRS penalty abatement (or refund).
Who Qualifies to Remove IRS Penalties from COVID?
If you had IRS penalties for late-filing or late payment, those IRS fines can be challenged and removed for:
- Payroll Tax Returns (Form 941 and 940)
- Business Tax Returns (Forms 1120, 1120S, 1065)
- Personal Tax Returns (Forms 1040)
Reducing the penalties will reduce your overall IRS debt. Even if you are seeking or currently under some other IRS payment option, you can still seek this IRS penalty relief.
However, if you are currently seeking an Offer-in-Compromise, consult with your attorney before moving forward with a claim.
Even more, you can also remove any interest charged on those penalties. You might even be entitled to a refund.
If you are not sure whether this applies to you, let’s book a Strategy Session to find out.
Remove IRS Penalties 2020-2023, IRS Tax Attorney (Naperville, IL)
Deadline to Claim IRS Penalty Refund (July 10, 2026)
For most people, the deadline to act expires on July 10, 2026.
A proper claim is exceptionally important to receive this COVID-era penalty reduction. To request IRS penalty relief or a refund, taxpayers typically must file IRS Form 843 (Claim for Refund and Request for Abatement) with a written explanation citing COVID deadline relief and the Kwong decision. The Form 843 claim(s) must be filed no later than the deadline date.
Do You Need Help Filing an IRS Penalty Refund Claim?
This is a unique opportunity. The claim must be properly drafted and supported to preserve the claim. Therefore, your claim must be “bullet- proof” enough to survive the IRS’s challenges.
This issue involves the interpretation of federal tax law and IRS administrative procedure. A proper claim is submitted with these concerns addressed. It matters.
Our approach for these COVID-era penalty situations is to determine:
- Whether the penalties were properly assessed
- Whether a refund is still available
- How to position the claim so that the IRS takes it seriously
Most people find that they need help constructing legal filings like this. If you were charged (or even paid) penalties like this, it may be worth having a professional review your situation.
Even if you have previously been told that nothing could be done, that may no longer be correct. An attorney can help you figure out what can be done.
Next Step
If you paid IRS penalties during COVID, do not assume the IRS was correct. More importantly, you must not wait to find out.
There is a limited window to act, and once the July 10, 2026, claim deadline passes, the opportunity may be gone.
Schedule a Strategy Session here:
https://www.stopirsproblem.com/strategy-sessions
We will review your situation and give you a direct answer on whether you may qualify for the COVID-era penalty removal or a refund.
Frequently Asked Questions About IRS Penalty Refunds
Can I really get IRS penalties refunded?
In some cases, yes. If the penalties were assessed during the COVID relief period and fall within the circumstances of the Kwong case, a refund may be available.
What types of IRS penalties may be involved?
The most common penalties include failure-to-file penalties, failure-to-pay penalties, and interest connected to those penalties.
What form is used to request an IRS penalty refund?
Most claims are submitted using IRS Form 843, along with a supporting statement explaining the legal basis for the claim, eligibility, and the taxpayer’s position.
What happens if I still owe the IRS?
If the penalties are reduced or refunded, your total IRS debt will also decrease. You may still be able to resolve any remaining balance through options such as an Offer in Compromise or an Installment Agreement.
Can I wait until the IRS appeal is final before filing a claim?
Waiting may cause you to lose the opportunity to act within the required time limits. Timely review of your eligibility is important.
How long does it take to get an IRS penalty refund?
Because this is a newly decided case, processing times are uncertain. IRS refund claims that require review can take several months, and processing may take longer if the IRS treats the claim as a pending appeal.
What if the IRS denies my penalty refund claim?
You may still have options, including administrative appeal or further legal review, depending on the reason for the denial. Any denial should be reviewed carefully with a tax attorney.