Hello, and welcome back to Inc.'s 1 Smart Business Story. During the pandemic, many businesses racked up IRS penalties amid shifting deadlines and confusion. Now, largely overlooked court rulings may offer a chance to claw some of that money back. As the 2025 tax deadline approaches, experts are urging companies and individuals to revisit filings from several past years, warning that a narrow window is closing. The opportunity isn’t automatic, and it comes with caveats, but for some, the refunds could be substantial.

In this article you’ll learn:

BY CHRIS MORRIS, Inc. Contributor

In addition to many other problems, the pandemic caused substantial tax headaches for business owners. Now, however, there might be some relief on the way. If you or your company were charged a late fee or penalty by the IRS during the pandemic, you could qualify for a tax refund.

As the tax deadline for 2025 draws near, experts are reminding people of a recent pair of largely unnoticed court decisions that created an opportunity for substantial refunds. A post by the Texas Society of Public Accountants (TXCPA) highlights the cases—Abdo v. Commissioner and Kwong v. United States—which invalidated the position the IRS had enforced during the pandemic and clarified tax relief measures during a federally declared disaster.

What that means in real world terms is that the deadline for tax filings from 2019, 2020, 2021 and 2022 should have been extended to July 10, 2023. And if you were charged with a late penalty or fee for any filing during that timeline, you could now be eligible to get that money back.

The time to make that appeal is limited, though. Here’s what you need to know.

Both individuals and businesses that were hit with penalties or interest from Jan 20, 2020 through July 10, 2023 are potentially eligible for a refund.

You only have until July 10, 2026 to submit the paperwork to get your money back. That’s because the statute of limitations for a refund claim is generally three years (or two years from when the tax was paid—whichever is longer). The court ruled the deadline for tax filings should have been moved to July 10, 2023. With the statute of limitations, that established July 10 of this year as the last day to file for the refund.

You or your accounting team will need to review past returns and any correspondence with the IRS to see if you were charged any penalties or fines during the affected years. If you see that you’re potentially eligible, you’ll want to get a copy of your tax transcript, which shows taxable income, payments, penalties and interest, among other details—along with the date they were made/assessed. The easiest way to do that is online.

You’ll want to use IRS Form 843, say experts, and when making the filing, you or your tax professional should specify this is a protective claim based on the Kwong v. United States decision.

It may take a while. The IRS is almost certain to appeal this ruling and won’t be paying any refunds until it has exhausted those avenues. By filing for the refund now, though, you’re doing so before the deadline expires, essentially preserving your right to receive one if the IRS appeals do not result in any changes.

“As a tax advisor, now is the time to evaluate whether protective refund claims are appropriate,” writes the TXCPA. “It is unlikely that the IRS will voluntarily grant refund claims based on these theories in the absence of additional adverse precedent or administrative guidance. 

Nevertheless, the statute of limitations continues to run. Filing timely claims preserves your client’s rights and positions them to benefit if the law develops favorably. Waiting may permanently forfeit the opportunity, regardless of the merits.”

TXCPA notes that the ruling may not have just suspended filing and payment deadlines. Several other tax items, which can be less beneficial for consumers and businesses, could also be altered. That means there are plenty of other areas of uncertainty, including whether the disaster relief proclamation also extended the IRS’s time to audit returns and whether the IRS would still be able to charge interest and/or penalties from liabilities assessed before the pandemic time period, which hadn’t yet been paid.

Those issues likely won’t be decided until well after the IRS finishes its appeals process.