SouthernWorldwide.com – Millions of Americans are facing a critical deadline of July 10 to claim potential refunds from the Internal Revenue Service (IRS). This urgency is due to a federal court ruling that impacts tax filing and payment deadlines during the COVID-19 pandemic.
The National Taxpayer Advocate, a division within the IRS responsible for overseeing taxpayer rights, has highlighted this important date. The ruling, issued by a federal judge in November, determined that the IRS should have extended tax filing and payment deadlines in response to the COVID-19 disaster declaration. This declaration was in effect from January 20, 2020, through May 11, 2023.
Under standard IRS regulations, taxpayers are typically granted an additional 60 days following the end of a disaster declaration to file returns or make payments. Consequently, this extension pushed the effective deadline to July 10, 2023.
Generally, taxpayers have a three-year window from the date they file a return to claim a refund. Alternatively, they have two years from the date they pay a tax, penalty, or interest bill to seek a refund. Given the court’s decision that the filing deadline should have been extended to July 10, 2023, affected individuals now have until July 10, 2026, to submit a refund request or a protective claim.
Erin Collins, the National Taxpayer Advocate, emphasized in a blog post that this relief will not be automatically provided. To safeguard their eligibility for a refund, most taxpayers must actively file a claim for refund on or before the July 10, 2026 deadline.
Who Should Check Their Eligibility?
According to Collins, certain taxpayers may be eligible for a refund if they experienced specific situations during the disaster relief period. These include individuals who filed a tax return and were subsequently assessed penalties or interest.
Eligibility also extends to those who paid or still owe penalties or interest for filing or paying late during the COVID disaster period. Furthermore, individuals who filed international information returns late may qualify.
Taxpayers who believe they missed claiming a refund, a refundable credit, a withholding credit, an estimated tax payment credit, or any other tax benefit during the COVID disaster period are also encouraged to investigate.
Collins advises taxpayers who might be affected to carefully review their records. They should then consider whether filing a refund claim, an amended return, an original return, an abatement request, or a protective claim is necessary.
A protective claim serves to preserve a taxpayer’s right to seek a refund while the underlying legal issue is still under review or resolution. This is a crucial step for those uncertain about the final outcome of the legal proceedings.
How to Claim a Refund
The specific form required to claim a refund depends on the nature of the refund being sought. For taxpayers seeking a refund of penalties or interest paid to the IRS during the disaster period, the appropriate form is Form 843, Claim for Refund and Request for Abatement.
Collins noted that because the November court ruling could potentially be appealed, individuals submitting Form 843 should write “Protective Refund Claim Pursuant to Kwong Case” across the top of the form. This refers to the official name of the ruling, Kwong v. United States. This inscription clearly identifies the claim as protective, safeguarding the taxpayer’s rights during the ongoing legal process.
For those who need to amend their income, deductions, credits, filing status, or other items that affect their tax liability, the recommended procedure is to file an original or amended return. This should be done using Form 1040-X for the relevant tax year.
Could the Court Ruling Be Overturned?
The legal landscape surrounding this issue remains unsettled, as the federal court ruling could face further challenges. Collins anticipates that the Department of Justice may appeal the decision, particularly given the government’s narrower interpretation of the postponement statute.
However, she cautioned that failing to file a claim before the July 10 deadline means taxpayers owed money will forfeit that refund, even if the ruling is ultimately upheld. The act of filing is essential to securing any potential entitlement.
“Filing a claim does not guarantee relief,” Collins stated. “But missing the deadline may permanently prevent taxpayers from receiving a refund to which they may ultimately be entitled.”
