Millions of Americans who paid IRS penalties on tax returns filed between 2020 and 2023 may be entitled to get that money back. The potential refunds range from a few hundred dollars to several thousand, depending on the penalty type and amount originally assessed. But there is a hard deadline approaching: July 10. After that, the right to claim a refund could be gone for good.
The National Taxpayer Advocate’s office, an independent watchdog that operates inside the IRS, published an analysis in spring 2026 warning that tens of millions of taxpayers may qualify for significant refunds on penalties they already paid. The root cause traces back to federal disaster declarations during the COVID-19 pandemic, which shifted IRS deadlines in ways the agency has never fully reconciled.
The critical detail: in most cases, you have to ask for the money yourself by filing a specific IRS form before the deadline expires. The IRS is not going to send you a check on its own.
Why pandemic disaster rules created a refund window
The legal basis is Section 7508A of the Internal Revenue Code, which gives the IRS authority to postpone tax deadlines during federally declared disasters. The statute also requires a minimum postponement of 60 days after the disaster period ends.
COVID-19 triggered disaster declarations in all 50 states, the District of Columbia, and U.S. territories. Unlike a hurricane or wildfire affecting a single region, these declarations covered virtually every taxpayer in the country. According to FEMA records, the COVID-19 disaster incident periods officially closed on May 11, 2023.
That date sets the entire refund argument in motion. Under Section 7508A(d), the 60-day postponement clock starts when the disaster period ends. The Taxpayer Advocate’s office argues this postponement applies not only to filing and payment deadlines but also to the date when certain penalties should have begun accruing. If the IRS assessed penalties during a window still technically covered by disaster relief, those penalties may have been charged prematurely, and the amounts already paid could be refundable.
The Advocate’s analysis also draws on federal court precedent testing whether disaster-related deadline extensions override the IRS’s standard penalty timelines. The office has pointed to that line of case law as support for applying disaster postponement rules more broadly to penalty assessments made during the pandemic years.
How this differs from earlier pandemic penalty relief
The IRS previously granted automatic penalty relief for certain 2020 and 2021 returns. That program, announced by the agency in 2023, targeted taxpayers who had balances due but never received reminder notices because of pandemic-era processing backlogs. The IRS applied that relief on its own, without requiring any action from taxpayers.
This new refund opportunity is broader and more demanding. It covers a wider range of penalty types and spans tax years 2020 through 2023, but it requires taxpayers to take affirmative steps. Specifically, the Advocate’s office says affected taxpayers need to file IRS Form 843, the standard claim form for requesting penalty abatement or a refund of penalties already paid.
Where the July 10 deadline comes from
Under general IRS rules, taxpayers can claim a refund only within specific time limits. As the IRS explains on its refund-claim guidance page, the window is typically the later of three years from the date the original return was filed or two years from the date the tax or penalty was paid.
The Taxpayer Advocate’s office contends that Section 7508A’s disaster extensions push those lookback windows later for pandemic-affected taxpayers. But even with that extension, the clock is running out. For taxpayers who paid penalties in the earliest part of the eligible window, the Advocate has calculated July 10 as the outer boundary. Miss that date, and the right to claim a refund may be permanently lost.
It is worth emphasizing: July 10 is the Advocate’s calculated deadline based on the disaster-relief statute, not a date the IRS has formally published. That distinction matters, but the Advocate’s reasoning is grounded in the plain text of the law.
What you would need to do
The Taxpayer Advocate’s office has urged potentially eligible taxpayers to take several steps before July 10:
- Pull your IRS account transcripts. You can request these through your online IRS account or by filing Form 4506-T. Look for penalty assessment codes on returns from tax years 2020 through 2023.
- Identify penalties that may fall within the disaster-extended period. Focus on failure-to-file and failure-to-pay penalties assessed before the 60-day post-disaster window expired.
- File Form 843. This is the formal claim for abatement or refund. You will need to specify the penalty type, the tax period, and the legal basis for your request (Section 7508A disaster relief). The form must be mailed to the IRS; it cannot be e-filed.
- Keep proof of mailing. Use certified mail or a private delivery service approved by the IRS so you have a postmark record showing the claim was submitted by July 10.
If you used a tax professional to prepare your returns, contact them now. They can help evaluate whether your penalties fall within the eligible window and prepare the Form 843 on your behalf. Taxpayers who qualify for free tax assistance through the IRS’s Volunteer Income Tax Assistance (VITA) program may also be able to get help, though availability varies by location.
One practical note: Form 843 claims are not fast. The IRS typically takes several months to process penalty abatement requests, and complex claims can take longer. Filing promptly gives you the best chance of preserving your claim within the deadline, even if the refund itself arrives later.
What the IRS has not confirmed
There is an important caveat: the IRS itself has not issued formal guidance endorsing the Taxpayer Advocate’s interpretation. The Advocate’s office operates independently within the IRS, and its analysis, while grounded in statute and case law, does not carry the same legal weight as a revenue ruling, revenue procedure, or Treasury regulation.
No official IRS data quantifies the total dollar amount at stake. The “tens of millions” figure is the Advocate’s institutional estimate, not a number drawn from published IRS records. The actual pool of eligible taxpayers could be smaller, particularly for those whose penalties were assessed under statutory provisions that fall outside the disaster-period window.
There is also no guarantee of consistent treatment. Form 843 claims are reviewed individually, often by different IRS units depending on the penalty type and tax year. Without clear public guidance from the agency, some examiners may accept the Advocate’s reasoning while others deny similar claims. Taxpayers whose claims are rejected would need to pursue administrative appeals or, potentially, litigation.
The IRS’s position will likely become clearer over the coming months as the agency responds to the expected wave of Form 843 filings. But the Taxpayer Advocate’s message is unambiguous: do not wait for that clarity if it means missing the July 10 deadline.
Why filing now costs you almost nothing and waiting could cost you everything
Tax refund deadlines are unforgiving. Once a lookback period expires, the IRS has no authority to issue a refund, even if the taxpayer’s claim is legally valid. Filing Form 843 before July 10 preserves your right to a refund regardless of how the IRS ultimately interprets the disaster-relief rules.
If the agency later confirms the Advocate’s position, filers who met the deadline will be in line for relief. If the agency rejects it, the cost of filing was a stamp and some paperwork. For taxpayers who paid hundreds or thousands of dollars in penalties on pandemic-era returns, that is a straightforward calculation.
The Taxpayer Advocate’s office has made its case publicly and urged action. Whether the IRS follows suit remains to be seen. The deadline, however, will not wait for the answer.
Paul Anderson is a finance writer and editor at The Financial Wire. He has spent seven years writing about investment strategies and the global economy for digital publications across the US and UK. His work focuses on making sense of economic policy, cost-of-living issues, and the stories that affect everyday Americans.
