Last updated: October 16, 2026 · By the Flex Tax and Consulting Group team
Think back to 2020 and 2021. Offices were closed, kids were learning from the kitchen table, and getting paperwork done on time was the last thing on anyone’s mind. A lot of people filed or paid the IRS late, and later got a bill for penalties and interest. In 2025 a court case called Kwong v. United States said many of those deadlines may have been paused, and more than 275,000 people asked the IRS for that money back. Now the answers are arriving in the mail, and some of them say no. If one of those envelopes is sitting on your counter, here’s what it means and why you shouldn’t toss it.
The short version
- A federal court said COVID-era tax deadlines were automatically paused from January 20, 2020 to July 10, 2023. Penalties and interest from that window could be refundable if that ruling holds.
- The government has appealed, so nothing is final yet.
- The IRS has started sending “denied” and “no consideration” letters on these claims. The National Taxpayer Advocate, the IRS’s own in-house watchdog for taxpayers, has asked the IRS to stop and review them.
- A formal denial can start a 2-year clock, and it counts from the date the IRS mailed it, not the day you opened it.
- Don’t ignore the letter, and don’t assume it’s the end of the story.
Does this sound like you?
You might care about this more than you think if any of these ring a bell:
- You paid a late-filing or late-payment penalty on a return that was due between early 2020 and mid-2023, maybe because your documents were stuck at a closed office or a K-1 came months late.
- You paid interest on a balance from those years and never really looked at how much it was.
- Your business owns part of a foreign company and got hit with a penalty for a late international form, like Form 5471, 5472 or 3520. These penalties can run into five figures for a single form. (More background in our Form 5471 guide.)
- You were owed a refund for 2019 through 2022 but filed very late or never filed, for example because you moved, changed jobs, or simply forgot.
- You or your tax preparer filed a “Kwong” claim this year and you’ve since gotten IRS mail you weren’t sure what to do with.
None of these means you’re owed money. They’re just the situations where it’s worth taking a second look at your mail.
Wait, what is Kwong?
When the President declares a disaster, the tax code automatically pushes back some IRS deadlines for the people affected. COVID-19 was declared a nationwide disaster that started on January 20, 2020, and the disaster period officially ended on May 11, 2023.
The IRS has long treated that automatic pause as short. In Kwong v. United States (U.S. Court of Federal Claims, November 2025), a judge disagreed. The court read the law in effect at the time to mean the pause ran for the whole disaster period plus 60 days: from January 20, 2020 to July 10, 2023.
If that reading holds, a lot of deadlines in that window may not have been missed at all, which raises questions about penalties and interest charged for being “late,” and about refunds that were thought to be too old to claim.
The catch: the government has appealed to the Federal Circuit. Its brief argues the pause lasted as little as 60 days (ending March 20, 2020) or, at most, one year. Until the appeals court rules, no one knows who’s right.
What’s in your mailbox, and what it means
| If your letter… | It generally means | Keep in mind |
|---|---|---|
| Says your claim is disallowed (fully or partly) and mentions your appeal or suit rights | The IRS has formally denied your refund claim. These are usually sent by certified or registered mail. | This is the one that can start the 2-year clock. |
| Says the IRS is giving your claim “no consideration” (often Letter 916C) | The IRS won’t process the claim as you sent it, for example because it sees it as incomplete or as a request to cancel penalties you haven’t paid yet. | The Taxpayer Advocate’s advice: don’t ignore it, but don’t assume it ends the matter. |
| Hasn’t arrived yet | Your claim may still be pending or on hold. | Keep proof of when you filed. Claims filed under the IRS’s earlier instructions generally don’t need to be refiled. |
The 2-year clock most people don’t know about
If the IRS formally denies a refund claim, you generally have two years from the date the notice was mailed to take the IRS to court over it (Internal Revenue Code §6532). Think of it like a timer that starts when the letter leaves the IRS, not when you finally open it.
Two things surprise people. First, calling the IRS or writing back to ask them to reconsider generally doesn’t pause that timer. Second, the only way to stretch it is a written agreement with the IRS (Form 907). That’s why a denial letter belongs on your calendar, not in a drawer, even while the appeal is still being fought.
Why this is in the news this week
Earlier this year, the National Taxpayer Advocate urged people who might be affected to file refund or protective claims, and pointed to July 10, 2026 as a key date for many of them. On July 1, the IRS made it possible to file these claims online through an IRS Online Account, or on paper with “Kwong vs. United States” written across the top of Form 843.
Now the IRS is answering, and the Advocate isn’t happy about how. In a blog post covered by the Journal of Accountancy on October 15, 2026, she said some people are getting letters that deny their claims or refuse to process them, and asked the IRS to:
- Stop sending Kwong denials while the courts decide the case.
- Find the people who already got letters, review those decisions and fix them where needed.
- Update its guidance before sending any more letters.
She also pointed out that IRS procedures generally allow claims like these to be put on hold while related court cases play out. As of today, the IRS hasn’t announced any change.
What this doesn’t change
- It’s not settled. If the government wins the appeal, many Kwong claims could fail.
- Unpaid penalties work differently. According to the Advocate, asking the IRS to cancel penalties or interest you haven’t paid isn’t a refund claim, so the refund deadline doesn’t apply the same way.
- California is separate. Kwong is about federal law and federal deadlines. It doesn’t change Franchise Tax Board deadlines, penalties or refund rules.
- Income is still income. Kwong is about deadlines, penalties and interest. It doesn’t change what you have to report: all income remains reportable.
A 10-minute checklist for this weekend
- Find the letter and keep the envelope. The postmark and mailing method can matter.
- Find your proof of filing: your online confirmation or the certified-mail receipt for your Form 843.
- Figure out which letter you got using the table above. Look for any mention of appeal or suit rights.
- Put a date on your calendar: two years from the mailing date of any formal denial.
- Pull your IRS account transcripts for 2019 through 2022 to see what penalties and interest were charged and paid.
- Keep an eye on the appeal. Watch for a Federal Circuit ruling or an IRS announcement about holding claims.
What to do next on a specific claim, such as an appeal, a lawsuit or an extension agreement, depends on your facts and needs a real review. If the letter is part of a bigger back-and-forth with the IRS, our guide to IRS correspondence audits may help. And if you’re already tidying up your taxes before December 31, our 2026 Year-End Tax Planning Checklist covers the rest.
FAQ
What is Kwong v. United States?
A November 2025 Court of Federal Claims decision holding that the COVID-19 disaster declaration automatically paused certain federal tax deadlines from January 20, 2020 through July 10, 2023. The government has appealed to the Federal Circuit.
The IRS denied my Kwong claim. Is it over?
Not necessarily. The law isn’t settled, and the National Taxpayer Advocate has asked the IRS to pause and review denials. But a formal denial generally starts a two-year window to file a refund suit, and further calls or letters with the IRS generally don’t stop that clock.
What is IRS Letter 916C?
It’s a “no consideration” letter: the IRS is telling you it won’t process a claim as submitted. Practitioners report it’s being sent on some Kwong claims, including requests to cancel penalties that haven’t been paid.
Do I need to refile my Kwong claim?
The IRS has said claims filed under its earlier instructions don’t need to be refiled. Keep proof of when and how you filed.
Does Kwong apply to California taxes?
No. Kwong is about federal deadlines under the Internal Revenue Code. California’s Franchise Tax Board applies its own rules.
Related reading
- Understanding the Correspondence Audit: Simplifying IRS Documentation Requests
- Form 5471: Reporting Requirements for U.S. Persons with Ownership or Control of Foreign Corporations
- 2026 Year-End Tax Planning Checklist for High Earners, Business Owners & Investors
Sources
Last reviewed October 16, 2026.
- Kwong v. United States, No. 23-267 (Fed. Cl. Nov. 25, 2025), opinion
- IRS: Filing Form 843 for claims citing Kwong v. United States
- National Taxpayer Advocate: Act on or before July 10, 2026, to protect potential COVID-19 disaster relief refund claims
- Journal of Accountancy: IRS urged by National Taxpayer Advocate to pause Kwong claims denials (Oct. 15, 2026)
- Journal of Accountancy: Government says Kwong court misread COVID tax relief law (Sept. 2026)
- 26 U.S.C. §6532: Periods of limitation on suits
Got one of these IRS letters? Have our team take a look.
This article provides general information only and is not tax or legal advice. Tax outcomes depend on individual facts and circumstances. Contact us about your specific situation.