For many taxpayers, the COVID years were filled with uncertainty. Businesses faced shutdowns, individuals experienced financial hardship, and tax deadlines shifted in ways few people had ever seen before.

Now, a case known as Kwong v. United States is attracting attention because it may affect taxpayers who paid certain IRS penalties during that period.

While the legal issues are still being examined, the case has raised an important question:

Did some taxpayers pay penalties they may have been entitled to challenge or recover?

Why the Kwong Case Matters?

The COVID era created unique circumstances for taxpayers across the country. IRS offices experienced significant backlogs, deadlines were postponed, and many taxpayers struggled to keep up with changing rules and filing requirements.

As a result, millions of dollars in penalties were assessed during and after the pandemic.

The Kwong case focuses on legal questions involving IRS penalty procedures and taxpayer rights. Although the ultimate outcome remains to be seen, the case has prompted tax professionals to take a closer look at penalties paid during the COVID period and whether some taxpayers may have additional avenues for relief.

You can read more about the case specifics in this Forbes article, you can also read more from the IRS Taxpayer Advocate’s website about the Kwong penalties

Who Should Pay Attention?

You may want to review your records if you:

• Paid IRS penalties between 2020 and 2023
• Received failure-to-file penalties
• Received failure-to-pay penalties
• Experienced financial hardship during the pandemic
• Filed returns late because of COVID-related disruptions
• Requested penalty relief that was denied
• Paid penalties and simply moved on without reviewing your options

Many taxpayers assume that once a penalty is paid, the matter is closed.

That is not always the case.

Under certain circumstances, taxpayers may still have opportunities to seek refunds, challenge assessments, or request relief.

Why Timing Matters

Tax law operates under strict deadlines.

Even when a taxpayer may have a valid claim, refund opportunities are often limited by statutes of limitation and procedural requirements.

That means waiting too long could eliminate options that may otherwise be available.

The purpose of reviewing your situation now is not to assume you qualify for relief. The purpose is to determine whether further analysis is warranted before important deadlines pass.

What Records Should You Gather?

If you believe you may have been affected, consider gathering:

• IRS account transcripts
• Notices showing penalties assessed
• Proof of penalty payments
• Copies of tax returns filed during 2020 through 2023
• Any correspondence regarding penalty abatement requests

These records can help determine whether additional review is appropriate.

Taxpayers can access transcripts through their IRS Online Account.

What We Are Watching

At Cheshier Tax Resolution, we continue to monitor developments related to Kwong v. United States and other taxpayer rights issues.

Our goal is simple:

Provide taxpayers with clear information and help them understand whether opportunities for relief may exist.

Most taxpayers never hear about potential refund opportunities until it is too late.

You can learn more about our services that help us monitor and identify potential issues for taxpayers in our services library such as Transcript Monitoring Program, Penalty Abatement Services, and Tax Resolution Services.

We believe informed taxpayers make better decisions.

The Bottom Line

The Kwong case is still developing, but it has already sparked important discussions about COVID-era IRS penalties and taxpayer rights.

If you paid IRS penalties between 2020 and 2023, now may be the right time to review your records and determine whether further evaluation is appropriate.

The pandemic created unusual circumstances.

The tax consequences may still be unfolding.

Stay informed. Review your records. Protect your options.

FAQ: Kwong v. United States and COVID-Era IRS Penalties

What is Kwong v. United States?

Kwong v. United States is a court case that has drawn attention because it may affect how certain IRS penalty claims and refund requests are evaluated. Tax professionals across the country are monitoring the case closely because it could impact taxpayers who paid penalties during the COVID era.

Could I qualify for a refund of IRS penalties paid during the pandemic?

Possibly. Eligibility depends on the type of penalty, when it was assessed, when it was paid, and whether refund claim deadlines still apply. Each situation requires an individual review of IRS records and account transcripts.

Which IRS penalties may be affected?

While every taxpayer’s situation is different, many taxpayers are reviewing failure-to-file penalties, failure-to-pay penalties, and other penalties assessed during the COVID-19 disruption period.

What years should I review?

Taxpayers who paid IRS penalties between 2020 and 2023 should consider reviewing their records to determine whether additional relief opportunities may exist.

What records should I gather?

Helpful records include:

• IRS account transcripts
• Copies of IRS notices
• Proof of penalty payments
• Tax returns from 2020 through 2023
• Prior penalty abatement requests and responses

Is there a deadline to request a refund?

Yes. IRS refund claims are generally subject to strict statutes of limitation. Waiting too long may result in losing the ability to seek a refund even if a valid claim exists.

What if I already paid the penalty?

Paying a penalty does not automatically eliminate the possibility of pursuing additional review or relief. In some situations, taxpayers may still have options depending on the facts and timing of their case.

How can I determine whether I may be eligible?

The first step is reviewing your IRS account history and penalty assessments. A transcript review can often identify whether further investigation is warranted.

What is Cheshier Tax Resolution doing regarding Kwong-related relief opportunities?

We are actively monitoring developments related to Kwong v. United States and reviewing potential COVID-era penalty situations. Taxpayers who paid IRS penalties during the pandemic years may wish to have their records reviewed before applicable deadlines expire.

Should I wait until the case is fully resolved?

Waiting may not always be the best strategy. Certain taxpayer rights and refund opportunities are governed by filing deadlines. Reviewing your situation now can help preserve options while developments continue.

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