Tens of millions of taxpayers who were penalized by the IRS during the coronavirus pandemic for failing to pay their taxes or filing late may qualify for a refund or termination of the penalties they incurred during that period.  They will be happy to get it.

     However, the relief is not automatic or guaranteed, and most taxpayers need to file a claim for a refund or abatement of their tax liability by July 10 to get their money back.  The national taxpayer advocate, an independent watchdog of the IRS, is warning that the deadline to apply for relief is fast approaching after a federal court late last year ruled that taxpayers were not required to file their taxes on time during COVID-19.

     The IRS had assessed more than 120 million penalties against tens of millions of taxpayers for filing late returns, failing to pay taxes or failing to make required estimated tax payments between January 2020 and July 11, 2023.  The case, called Kwong v. U.S., decided that COVID-19 emergency laws extended the deadline to file and that the IRS owes penalty payments to taxpayers. The case is still being litigated.

     The taxpayer advocate calls the issue “widespread and not limited to a small or specialized group of taxpayers.” Ken Kies, assistant secretary at the Treasury Department, told The Associated Press that President Donald Trump’s Republican administration believes that Kwong “was wrongly decided because it is a misreading of the plain language of the statute.” Still, as it currently stands, taxpayers should fill out a form to preserve their rights, said Alyssa Maloof Whatley, a director at Frost Law, a tax firm with locations across the U.S.  “Either it holds up or it doesn’t,” she noted of the ruling. ”So by preserving your claim, you’re actually preserving your right to that money.”