The IRS Might Owe You Money: What the Kwong Case Means for COVID-Era Penalties

The IRS Might Owe You Money

During the COVID years, millions of taxpayers were hit with IRS penalties and interest.

Late filings. Late payments. Growing balances.

For most people, the assumption was simple:
“If the IRS charged it, it must be correct.”

But a recent federal case is starting to challenge that idea.

What Changed?

A case called Kwong v. United States is getting attention among tax professionals because it raises an important question:

"What if some IRS deadlines during COVID were actually postponed longer than people realized?"

If that’s true, it could mean something big: Some penalties and interest may have been applied too early — or incorrectly. According to the case, certain tax deadlines during the COVID disaster period may have been extended all the way through July 10, 2023, depending on the situation. That’s much longer than what many taxpayers were told at the time.

Why This Matters

If deadlines were legally postponed, then:

• Penalties for filing late may not have applied when they did

• Penalties for paying late may have been calculated incorrectly

• Interest may have started accruing earlier than it should have

In simple terms: You may have paid more to the IRS than you actually owed.

Who This May Affect

This doesn’t apply to everyone — but it could affect more people than expected.

You may want to take a closer look if you:

• Paid failure-to-file penalties

• Paid failure-to-pay penalties

• Paid IRS interest on a balance

• Owed taxes during 2020, 2021, 2022, or early 2023

• Were on a payment plan and continued accruing charges

• Filed or paid late during the COVID years

This includes both individuals and business owners.

Let’s be clear, this is not a situation where everyone gets a refund. Not every taxpayer qualifies and not every penalty is affected while the law is still developing. What this case does is open the door for the taxpayers, not guarantee the outcome which is why a proper review matters.

Timing matters with the IRS. There are strict deadlines for requesting refunds or challenging penalties. Some tax professionals are already pointing to July 2026 as a potential deadline to act, depending on your situation. If you wait too long, you could lose the opportunity, even if you qualify.

What our COVID Penalty Review Looks Like

At The Oasis Firm, we don’t guess, we review.

A COVID Penalty Review includes:

• Reviewing your IRS account transcripts

• Analyzing penalty history

• Checking interest calculations

• Evaluating timelines based on COVID relief rules

• Determining if a refund or abatement may be worth pursuing

This is about getting clarity and not making assumptions.

The Bottom Line

Most people never question IRS penalties once they’ve paid them, however, this situation is different. A recent case suggests that some of those charges may deserve a second look and if there’s money on the table, it starts with reviewing your account, not ignoring it. If you paid IRS penalties or interest during the COVID years, this is worth reviewing. Book a COVID Penalty Review and let us take a closer look at your situation. Because the IRS isn’t going to call you and suggest a second opinion.