A recent decision from the U.S. Court of Federal Claims has begun generating significant attention because it may dramatically expand the impact of COVID-19 disaster relief on federal tax deadlines.

In Kwong v. United States, decided in November 2025, the court held that disaster relief provisions enacted during the COVID-19 pandemic suspended certain federal tax deadlines for more than three years, from Jan. 20, 2020, through July 10, 2023. If this interpretation prevails, the decision could allow some taxpayers to claim refunds for late-filing, late-payment, and other penalties, together with interest, that accrued during that period and may extend certain tax filing and refund deadlines.

Although the case was decided several months ago, it has recently begun attracting more attention as tax practitioners recognize its potential scope and the approaching deadlines to file refund claims. Below is a summary of the case and why taxpayers should pay attention.

The Statutory Framework: Disaster Relief and Tax Deadlines

Federal tax law includes provisions that allow the IRS to postpone deadlines during federally declared disasters. One such provision is Code Section 7508A, which authorizes the IRS to delay certain tax deadlines for taxpayers affected by presidentially declared disasters.

Typically, these declarations apply to particular geographic areas affected by a storm or other natural disaster. During the COVID-19 pandemic, however, the President issued a nationwide emergency declaration. Congress subsequently amended Section 7508A as part of pandemic relief legislation to provide that certain tax deadlines would be suspended during the disaster period.

The statute provides, in essence, that certain tax deadlines are postponed for taxpayers affected by a federally declared disaster for the entire disaster period plus an additional 60 days.

The COVID-19 disaster declaration lasted from Jan. 20, 2020, through May 11, 2023, when the federal public health emergency ended. When the additional 60-day period is added, the relevant suspension period potentially extends through July 10, 2023.

The issue in Kwong was whether this suspension applied broadly to federal tax deadlines or only to the more limited postponements announced by the IRS during the pandemic.

The Kwong Case

The taxpayer in Kwong filed a refund lawsuit against the government after the IRS denied a refund claim. Under Code Section 6532, taxpayers generally must file such suits within two years after the IRS mails a notice that a claim for refund has been disallowed. The government argued the taxpayer’s lawsuit was untimely because it was filed outside the two-year statute of limitations. The taxpayer argued the limitations period had been suspended during the COVID disaster period under Section 7508A.

The Court of Federal Claims agreed with the taxpayer. The court concluded that the statutory language enacted by Congress automatically suspended certain tax deadlines during the disaster period. Since the COVID disaster period lasted from Jan. 20, 2020, through May 11, 2023, plus an additional 60 days, the court concluded the relevant deadlines were effectively suspended until July 10, 2023.

Why Kwong Matters

Although Kwong itself involved a procedural deadline for filing a refund suit, the court’s reasoning could have much broader implications.

1. Possible Refunds of Interest and Penalties

If tax deadlines were suspended during the COVID disaster period, some taxpayers may have paid interest or penalties that should not have accrued. For example, taxpayers who incurred:

• failure-to-file penalties,
• failure-to-pay penalties,
• underpayment interest, or
• penalties related to late payments or installment agreements

during the disaster period may have grounds to claim refunds.

The amount of potential refunds could be significant for taxpayers who resolved audits or paid substantial tax liabilities during the pandemic years.

2. Potential Extension of Certain Filing Deadlines

The reasoning of the case could also affect a variety of other tax deadlines that depend on statutory limitations periods. For example, if the disaster period suspended statutory clocks, it could potentially extend deadlines for:

• filing refund claims,
• filing certain elections,
• bringing refund litigation, and
• other actions tied to statutory limitation periods.

3. Kwong Rejects the Government’s Narrow Interpretation

The government argued that the disaster relief statute should be interpreted narrowly and that IRS guidance during the pandemic only postponed certain deadlines for relatively short periods. The court rejected this argument, however, concluding that the statutory language enacted by Congress was broader and that the disaster period itself controlled the length of the suspension. In other words, the court held that the statute, rather than Treasury or IRS guidance, determines how long deadlines are suspended.

Why Kwong Is Generating Attention Now

Despite its potential importance, Kwong received relatively little attention when it was issued in November 2025. Interest has grown in recent months, however, for several reasons.

First, tax attorneys and accountants have begun analyzing the potential impact of the decision across a wide range of tax deadlines and liabilities, which has increased awareness of the case within the tax community.

Second, statutes of limitation for many potential refund claims related to pandemic tax years may begin to expire in 2026 or shortly thereafter. As a result, taxpayers and their advisors are evaluating whether protective refund claims should be filed while the legal issue remains unresolved.

Third, the government may appeal the decision or challenge similar claims in other cases. Until the issue is resolved by higher courts or additional decisions, there will likely be uncertainty regarding how broadly Kwong applies.

What Taxpayers Should Consider

At this stage, Kwong does not automatically entitle taxpayers to refunds of penalties and interest. Rather, the case represents one court’s interpretation of the statute, and additional litigation is likely. However, taxpayers who paid substantial interest or penalties during the pandemic period may want to evaluate whether they could potentially benefit from the court’s interpretation.

In particular, taxpayers may wish to review whether they incurred significant:

• failure-to-file or failure-to-pay penalties,
• other time-sensitive tax liabilities, or
• interest

between Jan. 2020 and July 2023. In some cases, it may be prudent for taxpayer to file protective refund claims to preserve their rights while the legal landscape develops.

Conclusion

Kwong highlights how pandemic-era disaster relief provisions may have broader implications than previously understood. If the Court of Federal Claims’ interpretation is upheld, taxpayers may have opportunities to recover penalties or interest paid during the COVID disaster period or to benefit from extended tax deadlines.

Because statutes of limitation may continue to run, taxpayers should consider reviewing their circumstances with a tax advisor to determine whether a protective claim for refund or other action is appropriate.