IRS Owes 'Significant' Refunds to Millions of Taxpayers

Tens of millions of taxpayers may qualify for IRS refunds that need to be claimed within the coming weeks, according to the agency's taxpayer advocate. And one expert said that these refunds are expected to be "significant" for some taxpayers.

In a notice published last week, the National Taxpayer Advocate said that a large number of Americans could be eligible for refunds or reductions in penalties and interest tied to postponed filing deadlines during the COVID-19 emergency declaration period.

But taxpayers who may qualify do not have much time left to take action.

Millions Could Qualify for Refunds

The National Taxpayer Advocate recently announced that the IRS may owe refunds to tens of millions of taxpayers for penalties and interest that were imposed during the 3.5-year COVID disaster declaration window.

The potential refunds stem from several recent court rulings, including the decision in Kwong v. United States, which determined that the tax code's treatment of federal disaster declarations effectively postponed filing and payment deadlines 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 to the taxpayer advocate, millions of Americans could potentially receive refunds or abatements for amounts assessed during that period involving:

• Penalties for failing to file returns on time, pay taxes on time, or submit estimated tax payments.
• Interest that may have started accruing too early or should not have accrued at all.
• Overpayment interest connected to the 2020-2023 disaster declaration period.

The taxpayer advocate cautioned that the Justice Department could still appeal the ruling.

Additionally, it's important for taxpayers to know that these refunds will not be issued automatically. Taxpayers who believe they qualify must actively submit refund claims, and the filing deadline is approaching quickly.

Refunds Could Be 'Significant'

Given the nature of these refunds, everyone who qualifies will see a different refund amount, so it's impossible to tell each taxpayer what to expect. However, one expert believes that these funds will be "significant" for some.

In a blog post last month, Jessica Marine of Frost Law wrote that some taxpayers who incurred penalties during that period could be owed a large amount of money from the IRS.

"The dollar amounts could be significant, particularly for businesses that faced liquidity challenges during the pandemic and incurred substantial failure-to-pay [tax] penalties," Marine wrote in her blog post.

Deadline Fast Approaching

The National Taxpayer Advocate warned that the window to pursue these possible refunds is closing fast.

The advocate recommended that the IRS raise awareness about the issue, offer taxpayers a six-month extension to file refund claims, explore automatic relief options that would eliminate the need for individual filings, and establish an online portal for submissions. However, it remains uncertain whether any of those steps will actually be implemented.

If no additional action is taken, taxpayers will need to submit their claims by July 10.

The advocate also noted that these claims currently must be submitted on paper forms. Because mailed filings may not generate immediate proof of receipt, taxpayers are being encouraged to send claims through certified mail so they have documentation showing the forms were submitted on time in the event they are delayed or lost.

How to Know if You Qualify

As previously mentioned, these refunds will not be automatically applied, so taxpayers who are owed these refunds will need to act.

Taxpayers can check tax records to see if they were penalized or served interest during the COVID tax filing pause. This can be done by asking a tax professional or by looking at their IRS tax transcript.

If you do believe that you qualify for a refund, you can file a claim via the IRS Form 843, using information from your tax transcript. It's also important that you specify on this form that it's a protective claim based on the Kwong v. United States decision.

This story was originally published by Men's Journal on May 18, 2026, where it first appeared in the News section. Add Men's Journal as a Preferred Source by clicking here.

2026 The Arena Group Holdings, Inc. All rights reserved.

This story was originally published May 18, 2026 at 9:05 AM.