Millions of Americans may be due a refund from the IRS but face a July 10 deadline to claim the money, according to the National Taxpayer Advocate, a division of the agency that oversees taxpayer rights.
The deadline stems from a federal judge’s November ruling that the IRS should have suspended tax filing and payment deadlines during the COVID-19 disaster declaration, which lasted from Jan. 20, 2020, through May 11, 2023. Under IRS rules, taxpayers then received an additional 60 days after a disaster declaration ended to file returns or make payments, pushing that deadline to July 10, 2023.
Taxpayers generally have three years after filing a return — or two years after paying a tax, penalty or interest bill — to claim a refund. Because the court ruled that the filing deadline should have been extended to July 10, 2023, affected taxpayers now have until July 10, 2026, to request a refund or file a protective claim, National Taxpayer Advocate Erin Collins said in a blog post.
“However, this relief will not happen automatically. To protect their rights, most taxpayers must file a claim for refund – generally on or before July 10, 2026,” Collins noted.
While Collins didn’t say how much the potential refunds could amount to, she noted that they could represent “significant financial support tied to withholding, refundable credits or stimulus-related benefits,” especially for low-income workers and families.
Who should check whether they’re eligible?
Taxpayers may be eligible for a refund if they fall into the following situations, according to Collins:
You filed a tax return during the disaster relief period and were assessed penalties or interest.You paid or still owe penalties or interest for filing or paying late during the COVID disaster period.You filed international information returns late.You believe you missed claiming a refund, refundable credit, withholding credit, estimated tax payment credit or another tax benefit during the COVID disaster period.
“Taxpayers who may be affected should review their records now and consider whether they need to file a refund claim, an amended return, original return, abatement request or a protective claim,” Collins wrote.
A protective claim preserves a taxpayer’s right to seek a refund while the legal issue is still being resolved.
How do I claim a refund?
The form taxpayers should file depends on the type of refund they are seeking. Taxpayers who want to claim a refund for penalties or interest they paid the IRS during the disaster period should file Form 843, Claim for Refund and Request for Abatement, Collins wrote.
Because the November court ruling could still be appealed, people who submit the form should write “Protective Refund Claim Pursuant to Kwong Case,” referring to the ruling’s official name, Kwong v. United States, across the top of the form, she said. A protective claim preserves a taxpayer’s right to seek a refund while the legal issue is still being resolved.
Those seeking to change income, deductions, credits, filing status or other items affecting their tax liability should instead file an original or amended return using Form 1040-X for the applicable tax year, Collins explained.
Collins said that the process “is not a fair result for taxpayers.”
“When potential relief exists but taxpayers must know to ask for it, unrepresented taxpayers, low-income taxpayers, and taxpayers who cannot easily obtain transcripts or professional help are at special risk of losing refunds,” she said. “In fact, I suspect only a tiny fraction of potentially eligible taxpayers will file timely claims.”
Could the court ruling be overturned?
Because the federal court ruling could be challenged, the law “remains unsettled,” Collins wrote. She expects the Department of Justice to appeal the decision because the government had a narrower interpretation of the postponement statute.
But failing to file a claim before July 10 means taxpayers owed money will lose out on that refund, even if the ruling is upheld, she added.
“Filing a claim does not guarantee relief. But missing the deadline may permanently prevent taxpayers from receiving a refund to which they may ultimately be entitled,” Collins said.
Alain Sherter
