EXPLAINED: >URGENT< need to file Protective Claims with the IRS under Kwong vs US

[Michael Plaks]

I'm writing this time-sensitive post at the end of June 2026, when every financial podcast is talking about the Kwong vs. United States case. Strangely, BiggerPockets has been very quiet about it, even though the issue is both extremely important and extremely urgent. And, of course, a lot of misinformation is circulating, so let's clear it up.

What's the deal? — The short version

Mr. Kwong took the IRS to court and—at least initially—won. He argued that COVID, as a federal disaster, should have extended all IRS deadlines until the pandemic was officially over, which means until July 10, 2023.

If so, then the IRS should not have charged penalties during that time, and you can request those penalties be refunded if you paid them. Also, you may still have time to change tax returns from the COVID years.

But this potentially lucrative window of opportunity closes in less than three weeks: July 10, 2026. You may need to take URGENT action.

Sounds great! How do I get these refunds?

Well, things are not as simple as they sound at first.

For starters, Mr. Kwong won only the initial battle in what could become a long war. The IRS, to nobody's surprise, disagreed with the court and filed an appeal. And whoever loses the appeal is almost certain to take the case to the next level. This case could go all the way to the Supreme Court, and it could take months if not years before we have a final answer.

Until then, the IRS is not playing along and is not issuing any refunds.

As you've already figured out, this is not merely a delay. This is complete uncertainty. The IRS might ultimately win the case, and then nobody will get any breaks.

Another important point: this is not like government rebate checks sent to everybody. It is mainly about penalties charged during the COVID years. If you filed everything on time, made no mistakes, and did not owe money to the IRS, then you probably did not incur IRS penalties and can ignore this whole issue.

If it's not settled yet, then what's the rush?

Great question. After July 10, 2026, it will be too late to ask the IRS for your COVID-time money back.

If you think you have a refund opportunity under Kwong and want this money, you must file your claim before July 10, just in case Mr. Kwong ultimately prevails. You cannot wait until the higher courts issue a final decision.

The game plan is:

1. Apply immediately, before July 10.

2. Wait and see how this case plays out in courts.

3. If the IRS loses, fight to have your specific claim accepted.

Why do we need to apply? Why won't they just send us our money?

Funny you should ask. Because government, duh!

In fact, the National Taxpayer Advocate urged Congress and the IRS to do exactly that: issue automatic relief to everybody. Otherwise, she correctly argues, it's grossly unfair: those who knew about the opportunity and had good professional help will benefit, while everyone else will lose out.

Nice try, but it's not going to happen, for multiple reasons.

Why don't we all just apply? What is there to lose?

Well, first, as mentioned above, you may not have any money to claim under Kwong anyway.

Second, this is not a great DIY project. For most Kwong-based refunds, you need to submit a "Protective Claim" on IRS Form 843. This form requires specific language, numbers and a detailed description of your claim. If you try to wing it or delegate it to ChatGPT, the IRS will have a perfect excuse to deny your claim.

Make no mistake: if the IRS loses its appeal and is forced to cancel COVID-era penalties, they will use every possible trick not to pay. Just like insurance companies.

A sloppily completed Form 843 gives them exactly what they need for an excuse and gives you nothing. Cutting corners on filing this claim is a very short-sighted move. Filing a quick-and-dirty form today and hoping to replace it later with a better one will not work. After July 10, it will be too late to make changes, in most cases.

You will likely need assistance from someone with real experience fighting the IRS: an attorney, a CPA, or an Enrolled Agent (EA)—and a good one. This is not cheap.

Suppose you pay one of us tax professionals to prepare your claim, and the IRS later wins in court. In that case, your money will have been spent for nothing. For a relatively small claim, that route may not make financial sense.

Am I a good candidate to file a Kwong claim?

I wish there were a simple test. No such test exists.

Opportunities based on Kwong are diverse, and each comes with its own gotchas, deadlines, and conditions.

Here are some of the most common—though not the only—situations in which you may need to act now:

1. Some of your tax returns that were due before July 2023 were filed late, and the IRS charged you late penalties.

2. Some of your payments that were due before July 2023 were made late (or are still unpaid), and the IRS charged you late penalties and/or interest.

3. Some of your tax returns due before July 2023 are still unfiled.

4. Some of your tax returns filed during the COVID years contain errors or missed opportunities, and you would like to correct them for a better result.

5. The IRS sent you letters stating that some of your tax returns due before July 2023 were incorrect and that you now owe more.

6. You have recently been audited by the IRS.

What should I do if I think I have a Kwong opportunity?

The most important thing is this: HURRY UP!

After July 10, the ship will sail, and you will most likely be left standing on the shore.

Find a truly competent tax professional TODAY and ask for help. Not just anybody, because the details do matter here. Remember: most of us tax guys are swamped with preparing Kwong claims right now. Every day you wait works against you.