Taxpayers may be eligible for refunds of penalties paid to the Internal Revenue Service during the Covid pandemic, following two recent court decisions. The rulings potentially allow refunds for penalties paid between 10 January 2020 and 10 July 2023, according to a memo from the Texas Society of Public Accountants.
Those seeking a refund must file a request by 10 July 2026. Tax attorney Alyssa Maloof Whatley, co-founder of EasAly AI, said: 'Filing a claim before the July 10, 2026 deadline is essential regardless of how the appeal resolves.' She added that the IRS may initially deny claims pending an appeal, but that denial is not the final word.
Eligible penalties include those for underpayment of estimated taxes, late payment, late filing, and refunds delayed beyond 45 days after certain filing dates. For example, a taxpayer who owed £5,000 and filed three months late would have paid a 5% penalty totalling £750; a £10,000 balance would incur £1,500 in penalties.
Penalties paid under installment agreements—federal payment plans for taxpayers owing £50,000 or less—may also be refundable. Taxpayers can check their online IRS account or consult a tax professional to identify eligible payments.
To claim a refund, individuals should file IRS Form 843, either themselves or through a tax professional. The process may be slow as the court decisions face appeals, but Whatley emphasised that filing before the deadline is critical.
