Our January 2026 client alert highlighted the Court of Federal Claims decision in Kwong v. United States, 179 Fed. Cl. 382 (2025), which held that the pre-November 2021 version of Section 7508A(d) required a mandatory postponement of certain tax-related deadlines running from January 20, 2020 through July 10, 2023. That decision provides a potential refund or abatement opportunity for taxpayers who paid underpayment interest and/or failure-to-file or failure-to-pay penalties tied to the disaster period. Since our initial alert, however, several developments have sharpened both the opportunity and the urgency for affected taxpayers.
This update addresses the significance of July 10, 2026 as a potential filing deadline for many protective claims; the lookback rule enacted as part of the Disaster Related Extension of Deadlines Act, P.L. 119-64; and the government's coordinated response to Kwong, including an appeal to the Federal Circuit filed on May 15, 2026.
Background
Section 7508A(d), as it existed before November 2021, disregards the period "beginning on the earliest incident date specified in the declaration...and ending on the date which is 60 days after the latest incident date so specified." In Kwong, the Court of Federal Claims held that Section 7508A(d) postponed certain tax-related deadlines for the entirety of the COVID-19 disaster incident period (January 20, 2020, to May 11, 2023) plus 60 days, making Mr. Kwong's February 2023 refund suit timely under Section 6532(a), even though notices of disallowance had been issued more than two years earlier. The court also rejected Treas. Reg. 301.7508A-1(g)(3)(ii), which limits the mandatory postponement period under Section 7508A(d) to no more than one year, and declined under Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), to defer to the IRS's reading of the statute. Kwong built on an earlier taxpayer-favorable decision from a unanimous Tax Court in Abdo v. Comm'r, 162 T.C. 148 (2024), where the court held that "[Section] 7508A(d) provides for an unambiguously self-executing postponement period for the filing of a petition with the court for a redetermination of a deficiency."
Potential July 10, 2026 Deadline
Section 6511(a) generally requires refund claims to be filed within three years from the original filing deadline or two years from the time tax was paid, whichever period expires later. If the textualist reading of Section 7508A(d) applies to postpone the relevant filing deadline to July 10, 2023, the corresponding three-year claim period may expire on July 10, 2026. The National Taxpayer Advocate's April and May 2026 blog posts have identified July 10, 2026 as an important outer deadline for potential refund claims.[1]
Some taxpayers who paid penalty or interest that accrued during the disaster suspension period could have a different deadline based on the alternative deadline of two years from the date of payment of tax. Section 6511(b)(2)(A) provides that if a taxpayer files a claim for refund more than three years after the due date of the original return, the taxpayer's recovery is limited to the tax paid in the two years prior to filing the claim. Section 7508A(f), added as part of the Disaster Related Extension of Deadlines Act, P.L. 119-64, and effective for claims filed after December 26, 2025, syncs the extension of time to file an original return under Section 7508A(d) with the lookback rule under Section 6511(b)(2)(A). Thus, if the original due date of the taxpayer's return is extended under Section 7508A(d), and the taxpayer files a refund claim within three years of the extended due date, the taxpayer's recovery is not limited to the tax paid within two years of filing the refund claim.
Not every claim will share that deadline. Some penalty or interest claims may turn on a two-year-from-payment deadline. Separately, Section 6511(b)(2)(A) provides that if a taxpayer files a timely claim for refund more than three years after the due date of the original return, the taxpayer's recovery is limited to the tax paid in the two years prior to filing the claim. Section 7508A(f), added by P.L. 119-64, and effective for claims filed after December 26, 2025, syncs the extension of time to file an original return under Section 7508A(d) with the lookback rule under Section 6511(b)(2)(A). Thus, where Section 7508A(d) applies, Section 7508A(f) may allow a timely refund claim to recover payments that would otherwise fall outside the ordinary two-year lookback window.
Government Response to Kwong
On March 13, 2026, the Tax Court entered a stipulated decision in Mayronne v. Comm'r, No. 1984-24, where the parties agreed that no interest would be assessed on a 2021 tax deficiency that accrued during the COVID-19 incident period. Except for the stipulated decision in Mayronne, the government has defended its interpretation of Section 7508A(d) and contested the scope of mandatory disaster relief. On May 15, 2026, the Department of Justice filed a notice of appeal of the Kwong decision to the Federal Circuit. The Internal Revenue Service issued an Action on Decision regarding the Abdo case on May 20, 2026, confirming that the IRS will not agree to any interpretation extending mandatory deadline relief beyond 60 days.
On June 8, 2026, DOJ filed its response to the taxpayer's summary judgment motion in Western Digital Corp v. United States, No. 26-cv-00215 (Fed. Cl. Feb. 6, 2026), a Court of Federal Claims case involving a corporate refund claim of approximately $20.7 million in underpayment interest tied to a 2008 income tax deficiency. DOJ's brief argues that Section 7508A is not a generalized tolling statute and that interest relief applies only when the relevant tax-related deadline fell during the postponement period. DOJ also reiterates the argument that because President Trump's Major Disaster Declarations for the COVID-19 pandemic recognized January 20, 2020 as the start date of the COVID-19 incident and stated that the disaster was "continuing," without specifying an end date, January 20, 2020 is both the earliest and the latest incident date specified in the declaration, so the mandatory period lasted only 60 days from January 20, 2020.
The government's argument for interpreting a "continuing" disaster declaration appears counterintuitive. First, it makes the use of the term "continuing" in a disaster declaration meaningless for purposes of the mandatory relief period under Section 7508A(d), even though the phrasing is common for federal disaster declarations. In Kwong, Judge Silfen specifically rejected this reading. Second, taxpayers affected by a disaster declared to be "continuing" would be entitled to less mandatory relief than taxpayers affected by a closed-period disaster. Last, the Treasury Regulations published under Section 7508A include an example where FEMA amends a major disaster declaration that is "continuing" to specify a latest incident date. In that case, the Treasury Regulations state that the mandatory relief period in Section 7508A(d) begins on the date specified in the initial declaration and ends 60 days after the latest incident date specified by FEMA in the amended declaration.
Recommended Next Steps
Taxpayers who may benefit from the Kwong holding should consider the following before July 10, 2026:
- Identify affected tax years and payments. Review all years with underpayment interest or failure-to-file/failure-to-pay penalties assessed during the period from January 20, 2020 through July 10, 2023.
- Obtain and review IRS account transcripts to confirm payment dates, penalty assessments, and interest accrual periods.
- File protective claims where appropriate before July 10, 2026, via certified mail with return receipt. The claim should be specific as to its grounds, state any alternative grounds for relief that are applicable, and adequately disclose the position to avoid a potential penalty under Section 6676 for an erroneous claim for refund.
[1] https://www.taxpayeradvocate.irs.gov/news/nta-blog/tens-of-millions-of-taxpayers-may-be-eligible-for-significant-tax-refunds/2026/04/ and https://www.taxpayeradvocate.irs.gov/news/nta-blog/beyond-penalties-and-interest-how-kwong-may-affect-missed-tax-refunds-part-iv/2026/05/