How to File Form 843 for COVID Penalty Refunds by July 10

The clock is ticking on one of the largest potential refund opportunities in recent IRS history. Following the landmark Kwong v. United States decision in November 2025, tens of millions of taxpayers—individuals, businesses, partnerships, and trusts—may be entitled to recover penalties and interest improperly assessed during the COVID-19 disaster period. But here’s the catch: most of this relief is not automatic. If you or your clients paid failure-to-file penalties, failure-to-pay penalties, or excess interest on tax obligations between January 20, 2020, and July 10, 2023, you must file a protective refund claim by July 10, 2026, or risk losing that money forever.

For tax preparers, CPAs, and enrolled agents, this deadline creates both an opportunity and a logistical challenge. You’ll need to identify affected clients, reconstruct historical tax data, and file Form 843 claims—all while managing your regular workload. This guide walks you through exactly how to file Form 843 for COVID penalty refunds, who qualifies, what documentation you need, and how to ensure your practice is ready to meet the July 10 deadline.

Who Qualifies for the IRS COVID Refund?

The eligibility for COVID-era penalty refunds stems from the federal disaster declaration that began on January 20, 2020, and ended on May 11, 2023. Under Internal Revenue Code § 7508A(d), when a federally declared disaster is in effect, the IRS must postpone certain tax deadlines for the entire disaster period plus 60 days. This means any applicable deadline falling between January 20, 2020, and July 10, 2023 (May 11, 2023 + 60 days), was effectively postponed to July 10, 2023.

The problem? The IRS did not consistently apply this postponement in real time. As a result, millions of taxpayers were assessed penalties and interest that should never have been charged—or were charged earlier than legally permitted.

Eligible Taxpayer Categories

Based on guidance from the National Taxpayer Advocate’s April 2026 announcement, the following taxpayers may qualify for refunds:

• Individual taxpayers (Form 1040 filers) who filed or paid late during the disaster period
• C corporations and S corporations with penalties assessed on 2019-2022 returns
• Partnerships that received late-filing penalties during the COVID period
• Trusts and estates with time-sensitive filing obligations
• Taxpayers with late-filed international information returns (Forms 5471, 8865, 8938, 3520, 3520-A)
• Employers who received employment tax penalties during the disaster window

Types of Relief Available

Qualified taxpayers may be entitled to refunds or abatements of:

Consider a practical example: A small business owner with a $20,000 unpaid tax balance who was assessed the maximum 25% failure-to-file penalty ($5,000) plus three years of interest could potentially recover thousands of dollars through this process.

How Do I Claim an IRS COVID Penalty Refund?

Filing a protective refund claim requires careful documentation and precise language. The IRS has not yet issued comprehensive guidance adopting the Kwong interpretation, which means you’ll need to build a solid case for each claim. Here’s the step-by-step process that accounting professionals we work with are following:

Step 1: Obtain IRS Account Transcripts

Before filing any claim, you need to know exactly what penalties and interest were assessed and when. Request the following transcripts for tax years 2019 through 2023:

1. Log into the IRS Individual Online Account or use your e-Services practitioner account
2. Request Account Transcripts for each relevant tax year
3. Alternatively, call the automated transcript line at 800-908-9946 (expect 5-10 calendar days for delivery)
4. For business clients, use Form 4506-T to request business account transcripts

The transcript will show transaction codes that identify specific penalties (e.g., TC 160 for failure-to-file penalty, TC 276 for failure-to-pay penalty) and the dates they were assessed.

Step 2: Identify Affected Deadlines

Cross-reference your transcripts against the COVID disaster timeline to identify which penalties and interest charges fall within the eligible window:

Step 3: Complete Form 843

Form 843, Claim for Refund and Request for Abatement, is the required form for this type of relief. Currently, it must be filed on paper—there is no e-file option. Here’s how to complete it:

1. Enter your name, address, and SSN/EIN in the header section
2. In Line 1, enter the tax period(s) affected (e.g., “December 31, 2020”)
3. In Line 2, enter the specific amount of refund or abatement requested
4. In Line 3, check the box for the type of tax (income tax, employment tax, etc.)
5. In Line 4, check “Penalties” and/or “Interest” as applicable
6. In Line 5a, select “Other” and write “IRC § 7508A(d) disaster relief”
7. In Line 7, provide your detailed explanation (see template below)

Form 843 Explanation Template

Use language similar to this in Line 7 of your Form 843:

“This is a protective claim for refund of [failure-to-file penalty / failure-to-pay penalty / interest] assessed for tax year [YEAR]. Pursuant to IRC § 7508A(d) and the holding in Kwong v. United States (U.S. Court of Federal Claims, November 2025), the COVID-19 federal disaster period extended from January 20, 2020, through May 11, 2023, with an additional 60-day extension to July 10, 2023. The [return filing / payment] deadline of [ORIGINAL DATE] fell within this disaster period and was therefore postponed to July 10, 2023. The penalty/interest assessed on [DATE FROM TRANSCRIPT] was improper because [the return was filed / payment was made] within the extended deadline. Taxpayer requests a refund of $[AMOUNT] representing the improperly assessed [penalty/interest].”

Step 4: Gather Supporting Documentation

Attach the following to your Form 843:

• Copy of the relevant IRS account transcript showing the penalty/interest assessment
• Copy of the original tax return (or e-file confirmation showing the filing date)
• Proof of payment for the penalty/interest being claimed
• Any IRS notices received (CP14, CP501, CP503, CP504) related to the assessment
• Bank statements or canceled checks showing payment dates

This is where having organized, accessible records becomes critical. Firms using cloud-hosted tax software often have an advantage here—historical returns, e-file acknowledgments, and client documents are typically preserved in a centralized, searchable environment rather than scattered across local hard drives.

What Is the Deadline to File for COVID-Era IRS Refunds?

The critical deadline is July 10, 2026. This date is derived from the standard three-year statute of limitations for refund claims under IRC § 6511, measured from the postponed deadline of July 10, 2023.

Understanding the Statute of Limitations

Under normal circumstances, taxpayers must file a refund claim within:

• Three years from the date the original return was filed, OR
• Two years from the date the tax was paid

Whichever is later. For COVID-era penalties where the deadline was postponed to July 10, 2023, the three-year window closes on July 10, 2026.

Why “Protective Claims” Matter

The National Taxpayer Advocate specifically recommends filing “protective claims” by July 10, 2026. A protective claim preserves your right to a refund even if:

• The IRS hasn’t yet issued formal guidance on Kwong
• Your specific situation is still being evaluated
• Congress might pass legislation affecting the outcome
• The government appeals the Kwong decision

Filing a protective claim essentially puts the IRS on notice that you’re asserting a right to a refund. If you miss the July 10, 2026 deadline, you may permanently lose the ability to recover these funds—even if the IRS later issues blanket relief for others who filed timely claims.

Timeline for Action

What Is Form 843 Used For?

Form 843, Claim for Refund and Request for Abatement, is the IRS’s general-purpose form for requesting refunds of penalties, interest, and certain taxes that don’t have their own dedicated refund form. Unlike Form 1040-X (which amends a tax return) or Form 941-X (which corrects employment tax returns), Form 843 specifically targets penalty and interest abatement.

Common Uses for Form 843

• Requesting abatement of failure-to-file and failure-to-pay penalties
• Claiming refunds of interest that was incorrectly assessed
• Requesting abatement of estimated tax penalties
• Claiming refunds of certain excise taxes
• Requesting relief under reasonable cause or first-time penalty abatement programs

Form 843 vs. Other Refund Methods

Where to Mail Form 843

Mail your completed Form 843 to the IRS service center where you would normally file your tax return. Use certified mail with return receipt requested to document your timely filing. Keep a complete copy of the form and all attachments in your records.

For individual returns, this is typically the service center for your state. For business returns, check the instructions for Form 843 or the original return type for the correct address.

Does the IRS Automatically Refund COVID-Era Penalties?

No. As of May 2026, the IRS has not issued comprehensive guidance automatically refunding COVID-era penalties based on the Kwong decision. The National Taxpayer Advocate has explicitly warned that “relief will not be automatic—most taxpayers must file refund claims by July 10, 2026.”

Why Isn’t Relief Automatic?

Several factors explain why the IRS hasn’t implemented automatic refunds:

• The Kwong decision came from the Court of Federal Claims, not the Supreme Court, leaving room for appeals or different interpretations
• The IRS has not issued a formal Notice or Revenue Procedure adopting the Kwong interpretation
• Implementing automatic refunds would require identifying millions of affected accounts and recalculating penalties and interest—a massive administrative undertaking
• Congress could potentially pass legislation affecting how this relief is administered

What the IRS Has Done

The IRS has taken some steps toward digital modernization that affect how refunds are processed. Under Executive Order 14247, the IRS began phasing out paper refund checks on September 30, 2025. Most taxpayers now receive refunds via direct deposit, which means having accurate banking information on file is essential.

For the 2026 filing season, the IRS began accepting returns as early as January 26, 2026, and most refunds are issued within 21 days of e-file acceptance. However, Form 843 claims processed through paper filing typically take longer—often 6-12 months for a response.

What This Means for Your Practice

For CPAs, enrolled agents, and tax preparers, the July 10, 2026 deadline represents both a significant client service opportunity and a potential liability risk. Clients who could have recovered thousands of dollars in penalties and interest may hold you responsible if they miss the deadline because you didn’t inform them.

The practical challenge is documentation. For many firms, 2020-2022 tax records may be scattered across multiple systems—old tax software installations, archived email attachments, local hard drives from departed staff members, or physical files that were never digitized. Reconstructing complete records for Form 843 claims requires systematic data recovery.

This is where cloud-based practice infrastructure pays dividends. Firms running their tax software through Sagenext or similar cloud hosting providers typically have centralized access to historical returns, e-file acknowledgments, and client documents going back multiple years. When a client calls asking about COVID penalty refunds, you can pull up their 2020 return in minutes rather than digging through boxes in storage.

Consider implementing a proactive outreach campaign to affected clients. Run reports in your practice management system to identify clients who:

• Filed late returns for tax years 2019-2022
• Made late payments during the COVID disaster period
• Received IRS penalty notices that you handled
• Had international information return penalties assessed

Document your outreach efforts. If a client chooses not to pursue a refund claim, get that decision in writing. If they want to proceed, establish clear expectations about your fees and the timeline for resolution.

Practical Documentation Checklist

Use this checklist to ensure you have everything needed before filing Form 843:

1. Request IRS account transcripts for tax years 2019-2023
2. Locate original tax returns (PDF copies from e-file or scanned paper returns)
3. Find e-file acknowledgments showing exact filing dates and times
4. Gather all IRS notices received during 2020-2023 (CP14, CP501, CP503, CP504 series)
5. Obtain bank statements or payment confirmations showing when penalties/interest were paid
6. Calculate the specific dollar amount of refund being claimed
7. Prepare the Form 843 explanation citing IRC § 7508A(d) and Kwong v. United States
8. Make copies of everything before mailing
9. Mail via certified mail with return receipt requested
10. Document the mailing date and tracking number in your client file

If you’re missing critical documents, check cloud backup systems, email archives, and even client records. Our article on recovering from IRS notice errors using cloud backup covers strategies for reconstructing lost tax documents that apply equally well to this situation.

Frequently Asked Questions

What is the IRS refund deadline for 2023 tax returns filed in 2024?

For 2023 tax returns filed in 2024, the standard refund claim deadline is three years from the filing date or two years from the payment date, whichever is later. If you filed your 2023 return by April 15, 2024, you generally have until April 15, 2027, to claim a refund. However, this is separate from the COVID-era penalty refund deadline of July 10, 2026, which specifically applies to penalties and interest assessed during the January 20, 2020, to July 10, 2023, disaster period.

How long do tax preparers need to keep client tax documents?

The IRS recommends keeping tax records for at least three years from the date of filing or two years from the date of payment, whichever is later. However, best practices for tax preparers suggest retaining client records for seven years or longer, as some situations (like fraud or unfiled returns) have no statute of limitations. For COVID-era penalty claims, you’ll need records going back to 2019-2023, making robust document retention policies essential.

Can I recover lost tax documents from cloud backup to file an amended return?

Yes, cloud backup systems are often the best source for recovering lost tax documents. If your firm uses cloud-hosted tax software, check your hosting provider’s backup retention policy—most enterprise solutions retain data for extended periods. Additionally, check email archives for e-file confirmations, client portals for uploaded documents, and accounting software backups for payment records. The key is having a systematic approach to searching across all potential data sources.

What happens if I miss the July 10, 2026 IRS refund deadline?

Missing the July 10, 2026 deadline likely means permanently losing the right to claim COVID-era penalty and interest refunds under the Kwong decision and IRC § 7508A(d). The statute of limitations will have expired, and even if the IRS later issues blanket relief, it may only apply to taxpayers who filed timely protective claims. There is generally no recourse after the deadline passes, which is why the National Taxpayer Advocate is urging immediate action.

How does cloud hosting protect tax preparer data during disasters?

Cloud hosting protects tax data through geographic redundancy, automated backups, and enterprise-grade security. Unlike local servers or desktop computers, cloud-hosted environments store data in multiple data centers, ensuring availability even if one location experiences an outage. This protection extends to natural disasters, ransomware attacks, and hardware failures. For tax preparers, this means client records remain accessible when you need them most—like when reconstructing documentation for time-sensitive refund claims.

What backup frequency is recommended for tax preparation firms?

Tax preparation firms should implement daily incremental backups with weekly full backups at minimum. During peak seasons (January through April and September through October), more frequent backups may be appropriate. Equally important is testing your restore procedures—a backup you can’t restore is worthless. Many firms using cloud-hosted Lacerte or similar solutions benefit from automatic backup systems managed by their hosting provider, eliminating the need to manage backup infrastructure in-house.

Take Action Before July 10, 2026

The COVID-era penalty refund opportunity created by Kwong v. United States and IRC § 7508A(d) is significant—potentially affecting tens of millions of taxpayers and billions of dollars in improperly assessed penalties and interest. But this opportunity has a hard deadline. After July 10, 2026, the statute of limitations closes, and these refunds may be lost forever.

For tax professionals, the message is clear: start identifying affected clients now, gather documentation systematically, and file Form 843 protective claims well before the deadline. Don’t wait for the IRS to issue automatic relief—it may never come.

If your practice needs to modernize its document management and backup infrastructure to handle projects like this efficiently, consider exploring cloud-hosted solutions that keep historical client data accessible and secure. to see how cloud hosting can streamline your tax practice operations and ensure you’re never caught without the records you need to serve your clients.