Recent media reports indicate that the IRS may need to refund certain penalties that millions of taxpayers paid during the pandemic. For Chinese Americans, especially those in the Austin community, this means that if you paid penalties and interest for late filing or late payment of taxes between 2020 and 2022, you may be eligible to apply for a refund or abatement.
Editor's Note (Updated July 16, 2026): This article was originally published in May 2026. The pandemic-era penalty and interest refund claims (Form 843) discussed here are related to the Kwong case in the Court of Federal Claims, for which the filing deadline was July 10, 2026 and has now passed, with the appeal still ongoing. Please also note: FBAR penalties fall under Title 31 of the U.S. Code and are not subject to the tolling of deadlines under Internal Revenue Code Section 7508A, nor are they covered by the refund mechanism described in this article. This has been corrected below.
Who May Be Eligible for a Refund?
Those typically affected include taxpayers who were assessed failure-to-pay/failure-to-file penalties or estimated tax penalties due to income fluctuations or filing delays caused by the pandemic. If you were charged penalties during the pandemic for being unable to file or pay on time, you may be eligible for a refund of amounts already paid, even if these policies were later relaxed or waived. Please note: FBAR penalties related to foreign account reporting fall under Title 31 of the U.S. Code and are not covered by this refund mechanism; for foreign account reporting obligations themselves, please refer to our FBAR Filing Guide.
How to Claim Your Refund
The specific process varies depending on the type of penalty. The general procedure includes: saving and organizing the penalty notices and payment records you received from the IRS, and identifying the penalty codes and assessment dates. For certain taxes and penalties, you can apply by filing Form 843 (Claim for Refund and Request for Abatement). For situations affecting income tax returns, you may need to file Form 1040-X (Amended Return) to make corrections and request a refund. When applying, pay attention to the statute of limitations and maintaining a chain of evidence; the deadline for this round of pandemic-era penalty refund claims was July 10, 2026, and those who have already submitted claims should keep their documentation and await processing. For common steps in the tax filing process, please refer to our Chinese Tax Filing Guide; for more background, see our Tax Insights column.
YZ CPA Note
1) Immediately review your IRS notices and bank records to confirm whether you paid any penalties during the pandemic and the amounts involved. 2) Determine the appropriate application path: for minor penalties, you can first try contacting IRS customer service to inquire about the specific forms; for more complex situations, it is advisable to have a professional evaluate your case. 3) Be mindful of deadlines: refund and appeal requests are subject to time limits, and delays may result in losing your right to claim. 4) Keep evidence: including emails, payment receipts, correspondence with the IRS, and proof of pandemic-related impact. For uncertain situations, especially for self-employed individuals or small business owners, we recommend contacting a professional tax advisor, which can improve your chances of success and reduce back-and-forth with the IRS. As a local service provider, YZ CPA understands the language and needs of the Austin Chinese community when it comes to tax filing (Austin Chinese CPA), allowing us to more effectively assist with review and filing.
For professional tax assistance, please visit the YZ CPA Services page or contact us.