New IRS Guidelines For Claiming Refunds in Kwong v. United States Case

The Internal Revenue Service (IRS) has recently clarified procedures for taxpayers seeking refunds or abatements stemming from the decision in *Kwong v. United States*. This guidance addresses how and when to file claims, especially concerning the upcoming July 10, 2026, deadline for certain refund claims. This case generally pertains to the proper assessment of interest and penalties during specific periods [1].

What is Kwong v. United States?

The *Kwong v. United States* case addresses the assessment of interest and penalties on underpayments of tax. The core issue revolves around when the IRS can properly assess interest and penalties, especially in situations where delays or errors might have occurred within the IRS. Understanding this case is crucial for taxpayers who believe they may have been improperly charged interest or penalties.

Guidance for Form 843 Submissions

Taxpayers filing claims for refunds related to the *Kwong* decision must use Form 843, Claim for Refund and Request for Abatement. The IRS has provided specific instructions for these submissions:

Individuals can submit *Kwong* refund claims electronically through their IRS Online Account. However, tax professionals cannot use client online accounts for this purpose, and there is currently no electronic submission option via the Tax Pro Account. This distinction is significant as it limits the digital avenues available to practitioners assisting clients [2].

When completing Form 843, taxpayers should clearly write "Kwong v. United States" at the top of the form. This notation helps the IRS identify and process these specific claims efficiently.

All paper-based *Kwong* refund claims should be mailed to the Internal Revenue Service, 1973 N Rulon White Blvd., Ogden, UT 84201. Taxpayers who have previously filed *Kwong* claims under older instructions do not need to refile them. However, all new and future claims must adhere to these updated mailing and formatting guidelines.

Distinction Between Refund and Non-Refund Claims

An essential aspect of the new IRS guidance involves differentiating between claims that will result in a tax refund and those that seek only to abate unpaid penalties and interest without generating a refund. The IRS has indicated that claims for abatement of unpaid penalties and interest, when no refund is expected, should generally not be filed at this time.

If a taxpayer files Form 843 for unpaid penalties and interest where there is still an outstanding tax balance, the IRS will likely issue Letter 916C, titled "Claim Incomplete for Processing; No Consideration." Such claims will not be treated as "protective claims" [3]. A protective claim serves to preserve a taxpayer's right to a refund when the outcome of a legal or administrative proceeding is uncertain, or when the statute of limitations for refunds is approaching [4]. Its primary purpose is to hold a place for a potential refund even before the final amount is determined. In cases where no refund is imminent due to an unpaid balance, the protective claim mechanism does not apply because there is no refund in question to protect.

Consider a hypothetical taxpayer, John, who filed his 2021 tax return with an unpaid balance of $55,432 on July 2, 2026. Even if a portion of this balance consists of penalties and interest eligible for *Kwong* relief, filing a Form 843 at this stage for abatement would not be processed by the IRS and would not be held as a protective claim because there is no overpayment to refund. The statute of limitations for asserting an abatement of penalties and interest does not begin until the underlying tax liability is paid. Once the balance is paid, for instance, on September 9, 2026, John would then have two years from that payment date (until September 9, 2028) to file a timely claim for the *Kwong*-eligible penalties and interest [5].

Deadline Considerations

The deadline of July 10, 2026, is critical for specific *Kwong* claims. This date applies to claims seeking a refund of amounts paid during the *Kwong* postponement period, which spanned from January 20, 2020, through July 10, 2023. Tax professionals and individual taxpayers must ensure that any claims for refunds pertaining to payments made within this timeframe are submitted by this deadline [6].

For amounts paid after July 10, 2023, the standard refund statute of limitations rules apply. Generally, a claim for credit or refund must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later [7]. Taxpayers should assess the specific refund statute of limitations end date for each relevant tax period. Depending on the ongoing developments in the *Kwong* case, taxpayers may choose to file a protective claim or an actual refund claim by the applicable limitation date.

It is imperative to note that the July 10, 2026, deadline and other refund limitation periods do not apply to *Kwong* claims that do not generate a refund. As discussed, the IRS will not process or hold such claims if there is no overpayment involved.

Footnotes

[1] Internal Revenue Code (IRC) Section 6402(a) – Authority to make credits or refunds.

[2] IRS.gov – Information on IRS Online Account and Tax Pro Account functionality.

[3] Internal Revenue Manual (IRM) 21.5.3.4.1 – Protective Claims.

[4] IRS Publication 17, Your Federal Income Tax – Discusses Protective Claims.

[5] IRC Section 6511(a) – Limitations on credit or refund.

[6] IRS Form 843 Instructions – Specific guidance for Kwong v. United States claims.

[7] IRC Section 6511(d)(1) – Special rules for filing claims for credit or refund and other periods of limitation.](https://www.irs.gov/pub/irs-pdf/p17.pdf) (See "Protective Claim" section).

[7] 26 U.S. Code § 6511 - Limitations on credit or refund