Recent legal developments have opened a potential path for taxpayers to reclaim money paid to the IRS during the pandemic. However, this is not a broad “stimulus” check—it is a specific opportunity to recover wrongfully assessed penalties and interest.
Thank you for reading this post, don't forget to subscribe!1. What is actually happening?
A November 2025 court ruling clarified how tax deadlines should have been handled during the COVID-19 disaster period (Jan 20, 2020 – July 10, 2023). The court found that because a federal disaster was declared, certain tax extensions were mandatory, meaning the IRS may have lacked the authority to charge late-filing or late-payment penalties during that window.
2. Who stands to benefit?
The IRS will not automatically send you a check. This “refund” primarily applies to:
- Late Filers/Payers: Anyone who was hit with a “failure to file” or “failure to pay” penalty during the period.
- Businesses & High-Income Earners: Those who faced significant interest or compliance penalties (such as partnership filing penalties) that often total thousands of dollars.
- Underpayers: Taxpayers who were charged interest on balances that, according to the court, shouldn’t have been considered “overdue” yet.
3. The Reality Check
While the news is promising, experts like Mark Gallegos (CPA) offer three vital warnings:
- It’s not for everyone: If you filed on time and paid in full, you likely weren’t charged the penalties in question.
- The ruling isn’t final: The government may still appeal or narrow the scope of this decision.
- Modest gains for many: For average individual taxpayers, the refund might only be a few dollars in interest—potentially not worth the cost of a professional’s help.
Important Dates & Action Steps
| Key Date | Significance |
| July 10, 2023 | The end of the “disaster period” defined by the court. |
| July 10, 2026 | The deadline to file a “protective refund claim” to preserve your rights. |
What should you do?
Review your IRS Tax Transcripts for the years 2020 through 2023. Look for “Penalty” or “Interest” assessments. If the amounts are significant, consult a tax professional about filing Form 843 before the July 2026 deadline.
Summary: This is a “technical” victory for taxpayers. If the IRS took penalty money from you during the pandemic, you have a limited window to ask for it back.
