Kwong v. United States: The Next Major Tax Refund Opportunity

In November 2025, the Court of Federal Claims held in Kwong v. United States that the COVID-19 disaster declaration extended filing and payment deadlines for much longer than many practitioners had assumed. The court concluded that, under the version of the Internal Revenue Code Section 7508A(d) applicable to COVID-19 disaster declarations, the mandatory postponement period for taxpayers began on January 20, 2020, and continued until July 10, 2023, which is 60 days after the FEMA-designated COVID-19 incident period ended on May 11, 2023.

The court’s reasoning turned on the pre-November 2021 version of Section 7508A(d). That version provided that the disregarded period began on the earliest incident date in the disaster declaration and ended 60 days after the latest incident date specified. The court read that language literally and rejected the government’s narrower interpretation, concluding that the COVID-19 declaration’s “beginning on January 20, 2020, and continuing” language extended the postponement through the end of the disaster period.

For individuals charged failure-to-file or failure-to-pay penalties during the COVID-19 disaster period, Kwong may be significant. Section 7508A(a) allows postponement of deadlines and affects the computation of penalties, additions to tax, interest, and refunds. Under Kwong, as the law currently stands, some taxpayers may argue that penalties or related interest assessed during the extended disaster period were improper, or that refund claims for certain tax credits, such as the Employee Retention Credit, remain timely up until July 10, 2026.

That said, Kwong remains unsettled law, as the U.S. Government recently filed a notice of appeal. While Kwong is an important taxpayer-favorable development, it is not yet the final word, and future rulings could narrow, refine, or reverse aspects of the decision. If a taxpayer believes they may be entitled to a tax refund under current law, it is recommended that they contact a law firm or tax professional to explore their options. If you have any questions, then please reach out to our team at (202) 455-6010 or schedule a confidential consultation.