IRS Owes Refunds to Millions of Taxpayers and Time is Running Out

Tens of millions of taxpayers could be entitled to refunds from the IRS that must be claimed over the next few weeks, according to the agency's taxpayer advocate.

In a post last week, the National Taxpayer Advocate issued a notice indicating that tens of millions of American taxpayers may be entitled to refunds or reduced penalties and interest due to the postponement of filing deadlines during the COVID-19 emergency declaration.

However, eligible taxpayers only have a few more weeks to claim those funds.

Millions Eligible for Refunds

In a recent post, the National Taxpayer Advocate announced that IRS refunds may be available to tens of millions of taxpayers for penalties and interest that were assessed by the IRS during the 3.5-year COVID disaster declaration period.

These refunds are available after some recent court cases, including a ruling in what's known as the Kwong case, that found the tax code's handling of federal disaster declarations meant that filing and payment deadlines were postponed throughout the period from Jan. 20, 2020, through May 11, 2023.

"Because of the infrequency of a disaster lasting this long, most taxpayers, even most tax professionals, did not foresee that filing deadlines and payments deadlines would be postponed for this long and that return filings and payments would not be considered late and therefore not subject to penalties and interest. But that is the logical extension of what the court ruled," the National Taxpayer Advocate wrote in its notice.

According ot the taxpayer advocate, millions of taxpayers across the country may be entitled to a refund or abatement of amounts assessed during the COVID period for:

• Penalties assessed for failure to file timely returns, failure to pay taxes, or failure to make estimated tax payments.
• Interest that began accruing earlier than it should have, or not at all.
• Overpayment interest for the 2020-2023 disaster period.

The taxpayer advocate did warn that the Justice Department could appeal the decision and that the refunds are not automatic. Affected taxpayers must file their refund claims, and the deadline to do so is fast approaching.

Running Out of Time

The National Taxpayer Advocate warns that taxpayers are running out of time to claim these refunds that could be owed.

The taxpayer advocate recommended that the IRS should publicize the issue for taxpayers, provide a six-month filing extension for refund claims, consider providing systemic relief so taxpayers don't have to file, and create an electronic submission portal. However, it's not clear whether or not any of that will happen.

If that is the case, taxpayers will need to file a claim by July 10.

"Unless the IRS or Congress acts to ensure all affected taxpayers will receive refunds if the Kwong decision is upheld, taxpayers seeking refunds for penalties and interest they paid relating to that period will, in most cases, need to file claims by July 10, 2026," the advocate explained.

"At the risk of repetition, my overriding goal is to get the word out to as many taxpayers as possible and to avoid disparate results between the 'well advised' and the unaware,'" they said.

The advocate warned that these claims must be filed through paper submissions. Since those filings may not provide an immediate confirmation of receipt, the advocate advises taxpayers to send claims by certified mail to have evidence of their timely submission in case the forms are lost or delayed.

This story was originally published by Men's Journal on May 8, 2026, where it first appeared in the News section. Add Men's Journal as a Preferred Source by clicking here.

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This story was originally published May 8, 2026 at 5:11 PM.