News Summary
Reports have previously indicated that millions of taxpayers may be eligible for COVID-era refunds from the IRS. Based on the Court of Federal Claims ruling in the Kwong case and guidance from the National Taxpayer Advocate, these refunds relate to certain penalties and interest paid during the pandemic. As a Chinese taxpayer in Austin, understanding this mechanism can help you verify whether you're affected.
Editor's Note (Updated July 16, 2026): This article was originally published in May 2026. The deadline to submit these penalty and interest refund claims (Form 843) was July 10, 2026, which has now passed, and the Kwong case remains on appeal. The original article incorrectly described the refundable scope as withholding or credit calculation errors (handled via Form 1040-X); this has been corrected below to reflect that these are Form 843 claims for penalties and interest.
Who May Qualify?
Generally, taxpayers who paid failure-to-file penalties, failure-to-pay penalties, or related interest during the pandemic (particularly for the 2020 and 2021 tax years) may qualify. The court determined that the COVID-19 disaster declaration triggered the suspension of deadlines under Internal Revenue Code Section 7508A(d), extending the deadline for these refund claims to July 10, 2026. This differs from ordinary refunds resulting from withholding calculation errors or missed credits — those corrections are handled via Form 1040-X and are subject to the standard statute of limitations for each respective year.
How to Submit a Refund Claim
Refund claims for these penalties and interest are submitted using Form 843 (Claim for Refund and Request for Abatement), along with supporting documentation such as penalty notices, proof of payment, and prior IRS notices; ordinary return corrections, on the other hand, use the amended return (Form 1040-X). This deadline passed on July 10, 2026: if you already filed a claim, please retain your documentation while awaiting IRS processing and the outcome of the appeal; if you have not yet filed, consult a professional to review your specific situation and evaluate whether other options may be available. For practical guidance, see our Chinese Tax Filing Guide, and for more tax knowledge, visit our Tax Insights column.
Foreign Accounts and Compliance Considerations
If you held foreign accounts or assets during the pandemic, in addition to correcting your federal taxes, you should also confirm that your FBAR and related information reporting are complete. Failure to timely report foreign accounts can result in additional penalties — we recommend reviewing our FBAR Filing Guide to confirm your compliance status.
Practical Impact for Chinese Americans
For Chinese Americans, this news means there may be recoverable cash, particularly for taxpayers whose household income was affected by the pandemic, whose filings were complex, or who experienced misunderstandings due to language barriers. Chinese friends in Austin should note that all types of refund claims are subject to deadlines, and the deadline for this particular penalty refund has already passed; also be alert to scam risks — the IRS will never proactively request payment information via social media or phone calls.
YZ CPA Note
YZ CPA Note: Don't rush to click on links from unknown sources or trust so-called "fast refund" services. We recommend first obtaining the IRS's official notice or a copy of your own tax return, gathering your income documentation and proof of payment, and then having a professional tax advisor assess whether the penalties you paid fall within the refundable scope and what options remain currently available. If your claim involves complex credits, foreign assets, or multi-year corrections, consider engaging an experienced Chinese-speaking CPA in Austin to assist, so as to avoid procedural errors affecting your refund outcome.
If you'd like to learn more about the claims process, or need help preparing documentation or filing on your behalf, please contact us for personalized advice.
For professional tax assistance, please visit the YZ CPA Services page or Contact Us.