A taxpayer who paid a $2,400 failure-to-file penalty in August 2024 has until roughly August 2026 to claim a refund. But someone who paid a similar penalty in June 2024 faces a deadline that lands in mid-July 2026, barely two months from now. And once that window closes, the IRS keeps the money for good, even if the penalty was assessed in error.
Millions of Americans paid IRS penalties during and after the pandemic. Many of those penalties may have been eligible for reduction or full refund, but the taxpayers never filed a claim. The statute of limitations under Internal Revenue Code Section 6511 gives you either three years from the date you filed the associated return or two years from the date you paid the penalty, whichever is later. For penalties paid in mid-2024, that two-year clock runs out in mid-2026. For penalties paid earlier, many deadlines have already passed.
The form you need is Form 843, the IRS document for requesting a refund or abatement of penalties, interest, and certain other charges. It cannot be e-filed. It must be printed, completed, and mailed with supporting documentation. That paper-only requirement means you need to account for preparation time and postal transit before the deadline hits.
Who qualifies and how much is at stake
The IRS assessed an enormous volume of civil penalties during the pandemic years. According to the IRS Data Book for fiscal year 2021, the agency assessed roughly 40 million civil penalties that year alone, spanning failure-to-file, failure-to-pay, estimated tax, and accuracy-related categories. Individual amounts ranged from under $100 to tens of thousands of dollars.
Not every penalty qualifies for a refund. You generally need to demonstrate one of the following:
- The IRS made an error in calculating or assessing the penalty.
- You had reasonable cause for the underlying failure, such as serious illness, a natural disaster, reliance on a tax professional’s incorrect advice, or inability to access records.
- You qualify under a specific statutory relief provision.
The IRS spells out acceptable reasonable cause arguments in its Internal Revenue Manual, Part 4.10.11. Pandemic-related hardships, including COVID illness, forced business closures, and disruptions to mail and IRS services, can support a claim when properly documented.
What the IRS already refunded automatically, and what it didn’t
In December 2023, the IRS announced broad penalty relief under Notice 2024-7. The agency waived approximately $1 billion in failure-to-pay penalties and issued automatic refunds or credits to about 4.7 million taxpayers and businesses. No paperwork was required from those who qualified.
But that automatic relief was narrow in scope. It covered only failure-to-pay penalties on returns that had already been filed, for accounts where the assessed tax balance was under $100,000 per return, per year. It did not touch:
- Failure-to-file penalties
- Accuracy-related penalties
- Estimated tax penalties
- Any penalty where the balance exceeded the $100,000 threshold
If your penalty fell outside those boundaries, you were not part of the automatic relief. Recovering that money requires filing Form 843 yourself.
How to calculate your specific deadline
The refund statute under IRC Section 6511 creates two possible deadlines, and you get whichever one expires later:
- Three years from the filing date of the return associated with the penalty.
- Two years from the date you actually paid the penalty (or the portion you want refunded).
For many taxpayers who paid penalties in 2020 or 2021, both windows have already closed. But if you made a penalty payment in 2024, the two-year window likely extends into 2026. A payment posted in July 2024, for example, would carry a deadline around July 2026.
The critical first step is checking your IRS account transcripts to confirm exactly when each penalty was assessed and when each payment posted. Those dates drive everything. You can pull transcripts through your IRS online account or by calling the IRS directly.
The Kwong ruling: a potential lifeline for expired claims
A 2024 decision from the United States Court of Federal Claims, Kwong v. United States (No. 23-1186), has created a potential opening for taxpayers whose standard refund windows have already closed.
The court examined how COVID-era federal disaster declarations interact with refund deadlines under IRC Section 7508A, which allows the IRS to postpone certain tax-related deadlines by up to one year during a federally declared disaster. The court concluded that the COVID disaster period, combined with the 60-day extension provision built into Section 7508A, could push some refund deadlines further out than the IRS had originally calculated.
In practical terms: if your refund claim would have expired under the normal statute, the disaster postponement may have added enough time to bring it back within the filing window.
There are important caveats. Decisions from the Court of Federal Claims are persuasive authority, not binding precedent across all IRS operations. As of May 2026, the IRS has not issued public guidance confirming it will apply the Kwong reasoning broadly. Different IRS units could reach different conclusions about whether a specific taxpayer’s situation qualifies for the extended deadline, particularly when payment dates, filing dates, and disaster-period dates overlap.
That said, tax practitioners who handle penalty abatement cases have noted that citing Kwong in the explanation section of Form 843 strengthens a filing, even without formal IRS adoption of the court’s position. If your claim would otherwise be time-barred, the ruling gives you a credible legal argument worth making.
Filing Form 843 step by step
The form itself is not long, but accuracy matters. Here is how to work through it:
Pull your IRS account transcripts. These show every penalty assessed, every payment made, and the exact dates for each. You need this information to fill out the form correctly and to confirm your deadline has not already passed.
Download Form 843 and its instructions. Both are on the IRS website. The instructions were last revised in December 2024. The form requires you to specify the tax year, the type of penalty, and the exact dollar amount you are requesting.
Write a specific explanation on Line 7. This is where your case lives or dies. If you are claiming reasonable cause, describe the pandemic-related circumstances that caused the failure: dates of illness, business closure orders, inability to access documents, disruptions to mail or IRS services. If you are relying on the Kwong decision to argue an extended deadline, cite the case by name and number and explain how the disaster postponement applies to your payment dates.
Attach supporting documents. Include copies of IRS penalty notices, payment confirmations, medical records, disaster declarations, or any other evidence that supports your explanation. Do not send originals.
Mail it to the correct IRS service center. The Form 843 instructions specify which address to use based on your state. Use certified mail with a return receipt requested. The IRS uses the postmark date to determine whether your claim was timely, so that receipt is your proof.
Because the form cannot be e-filed, build in at least a week for postal delivery if you are filing close to the deadline.
What happens after you file
Paper-filed claims take time. The IRS has not published specific processing timelines for Form 843 penalty refund requests, but based on general processing data and reports from the Taxpayer Advocate Service, expect several months for a response. Complex cases involving disaster-period arguments may take longer.
You will receive a written determination from the IRS: approved, partially approved, or denied. If your claim is denied, you have the right to appeal within the IRS or, in some cases, to file suit in federal court.
Taxpayers who cannot afford professional help should know that the IRS funds Low Income Taxpayer Clinics nationwide. These clinics provide free or low-cost assistance with penalty disputes and refund claims, including help preparing Form 843.
The statute does not bend, and it does not wait
The refund statute of limitations is one of the hardest deadlines in tax law. Once it expires, the IRS is legally prohibited from issuing a refund, even if the agency agrees the penalty should never have been charged. There is no hardship exception. There is no late-filing waiver. There is no appeals process that can override the clock.
If you paid any IRS penalty between 2020 and 2023, pull your transcripts this week. Check the payment dates. Calculate your deadline. And if there is any possibility you qualify, get Form 843 in the mail before mid-July 2026. The money either comes back to you or it stays with the IRS permanently. That decision is yours for roughly 59 more days.
Vince Coyner is a serial entrepreneur with an MBA from Florida State. Business, finance and entrepreneurship have never been far from his mind, from starting a financial education program for middle and high school students twenty years ago to writing about American business titans more recently. Beyond business he writes about politics, culture and history.
