National Taxpayer Advocate Urges IRS to Pause Denials of Kwong Pandemic Refund Claims
National Taxpayer Advocate Erin Collins has called on the Internal Revenue Service to suspend issuing denial and "no consideration" letters to taxpayers who submitted refund claims tied to ongoing litigation over COVID-19 disaster relief statutory deadlines. The agency has received more than 275,000 filings on Form 843, Claim for Refund and Request for Abatement, asserting claims under legal principles established in recent federal court rulings regarding pandemic postponement rules.
The dispute stems from the decision in Kwong v. United States, 179 Fed. Cl. 382 (2025), in which the U.S. Court of Federal Claims ruled that Section 7508A(d) automatically postponed the statutory two-year period under Section 6532(a)(1) for initiating a refund lawsuit during the COVID-19 disaster timeframe. The court determined that this postponement window began on January 20, 2020, and ended on July 10, 2023. Following that interpretation, Collins had previously advised potentially impacted taxpayers that filing refund or protective claims by July 10, 2026, could safeguard their legal remedies.
In a recent blog post, Collins expressed concern that current administrative screening procedures fail to reflect the active legal disputes still surrounding the Kwong precedent. She noted that standard procedure outlined in the Internal Revenue Manual favors holding protective claims in suspense while controlling legal issues are adjudicated. Denying or declining to process these submissions prematurely risks creating administrative confusion and unnecessarily forcing taxpayers into premature court actions.
This development affects a broad spectrum of taxpayers, including individual taxpayers, property owners, and business entities that filed Form 843 protective or refund claims relying on the Kwong timeline. The primary practical implication for claim filers receiving disallowance notifications is the strict limitation period that ensues. Receiving a formal notice of claim disallowance officially starts a two-year statutory clock to file a federal refund lawsuit, and informal ongoing discussions or correspondence with tax authorities will not halt or extend that clock.
To address these concerns, Collins has asked tax officials to halt further disallowance notices, identify taxpayers who have already received denial or non-consideration letters, and re-evaluate screening guidelines. While the Court of Federal Claims ruling offers legal support for extended claim periods, the ultimate standard remains uncertain while court proceedings continue. Affected filers should carefully evaluate any agency correspondence to determine whether formal disallowance notices have been triggered and monitor statutory litigation deadlines closely.
Source: Journal of Accountancy
