If you filed a claim based on Kwong v. United States to recover or remove COVID-era penalties and interest, you may have recently received a letter from the IRS denying it or saying it won’t be processed. It’s natural to read that letter and think the matter is over. In many cases, though, the situation is more complicated, and how you respond may affect whether you keep your rights while the courts decide the issue.
A Quick Refresher on Kwong
Kwong involves how a federal disaster-relief provision, IRC § 7508A(d), affected certain tax deadlines during the COVID-19 disaster period. Under the court’s interpretation, many taxpayers may have been charged penalties and interest they didn’t owe. The government has appealed, and the litigation is ongoing.
Because refund deadlines kept running while the courts considered the issue, many taxpayers filed refund, protective, or abatement claims, often by July 10, 2026. That wasn’t necessarily the deadline for every taxpayer, since some refund periods may still be open. The IRS has received more than 275,000 Kwong-related claims, and it is now responding to some of them with denials.
First, Figure Out What Kind of Letter You Received
Not every IRS letter has the same legal effect. The key question is whether you received a statutory notice of claim disallowance. The IRS commonly uses Letter 105C for a full disallowance and Letter 106C for a partial one.
When the IRS mails a formal notice of claim disallowance by certified or registered mail, you generally have two years from the mailing date to file a refund lawsuit. A few points are worth knowing:
- The notice doesn’t necessarily have to state the two-year deadline to start that clock.
- Asking the IRS to reconsider, or continuing to correspond with it, generally does not stop the clock.
- A letter that only says the IRS won’t process your claim, asks for more information, or proposes a future denial may not be a formal disallowance at all.
Because the difference can be hard to tell, it’s generally better not to guess.
What About Tax Years Before 2020?
Some taxpayers have received denials for tax years before the COVID-19 disaster period began. In September 2026, a federal district court in Singh v. United States allowed a refund suit involving a 2017 tax return to move forward. The court found the claim timely on the facts of that case, partly based on § 7508A(d). It did not decide whether the taxpayer was owed a refund.
Singh doesn’t mean every earlier-year claim is timely, since refund deadlines depend heavily on individual facts. It does show these questions are still being litigated.
Scenario One: You Already Paid and Filed a Refund or Protective Claim
If you paid the penalty or interest and then filed a claim, it’s important to keep good records, including:
· The IRS letter you received
· Your original claim (Form 843 or Form 1040-X) and proof of when and how you filed it
· Proof of payment
· Certified-mail receipts or electronic confirmations
· All other IRS correspondence
If the letter is a formal notice of disallowance and the two-year period expires without a timely lawsuit or a valid extension, you may lose the ability to get a refund. The law does allow the IRS and a taxpayer to agree in writing to extend that period, generally on Form 907. However, the National Taxpayer Advocate notes this option may not be procedurally available for current Kwong-related claims, so it shouldn’t be relied on without checking current guidance.
Scenario Two: You Asked the IRS to Abate Amounts You Haven’t Paid
An abatement request for penalties or interest you haven’t paid is different from a refund claim. If the IRS declined to process that kind of request, you may still have options while the litigation continues. These may include asking the IRS to delay certain collection activity.
A few cautions apply here:
- Don’t ignore collection notices. They carry their own deadlines and protections.
- Interest generally keeps accruing while the litigation is pending if the courts ultimately don’t uphold Kwong.
- Paying later may open a new path. If you pay the disputed amount, you may be able to file a refund claim, often within two years of the payment date. Keep records of exactly when and how much you paid, and don’t assume you have unlimited time.
The Taxpayer Advocate Is Urging the IRS to Hold Off
The National Taxpayer Advocate has asked the IRS to review the denials it has already issued and correct them where appropriate. She has also urged the IRS to hold Kwong-related claims until the courts resolve the legal questions, rather than issuing denials that could force taxpayers into lawsuits just to protect their rights. Her concern is that taxpayers may either give up on valid claims or believe they must sue immediately, and neither outcome serves taxpayers or the government.
How Bryson Law Firm Can Help
Whether a letter starts a legal deadline, whether your claim involves a paid or unpaid amount, and what options remain may all depend on the specific facts of your situation. Our attorneys can review the IRS correspondence you received, help you understand what it may mean for your claim, and talk through the options that may be available while the Kwong litigation continues.
If you’ve received an IRS letter about your Kwong claim, contact Bryson Law Firm today so we can help you understand where you stand before any deadline passes.
