A court ruling says COVID-era tax penalties may be refundable. The catch is July 10.

A federal court ruling that most taxpayers have never heard of could put money back in their pockets — but only if they act in the next two weeks.

That was the message Deena Elliott brought to The Lead Live on Thursday, where she broke down a late-2025 decision that could mean refunds of IRS penalties and interest charged during the COVID-19 pandemic. Her bigger worry, she said, is that almost no one in Kerr County knows the opportunity exists.

“Liberty Tax at the corporate level is just jumping up and down about it,” Elliott said. “Locally, I own it, along with my husband. And the question is, how am I going to get people to know this?”

Elliott owns the locally franchised Liberty Tax office on Main Street and is an enrolled agent, a credential that allows her to represent taxpayers before the IRS. She appeared as a guest on the Lead’s weekday webcast. (Disclosure: Elliott operates a commercial tax-preparation business that could be hired to file these claims. She also pointed viewers to a free, do-it-yourself option, described below.)

What the ruling says

The case is Kwong v. United States, decided in November 2025 by the U.S. Court of Federal Claims. The court found that a disaster-relief provision Congress added to the tax code in 2019 automatically postponed federal tax filing and payment deadlines for the full length of the COVID-19 disaster — from Jan. 20, 2020, through July 10, 2023, roughly three and a half years.

That is far longer than the narrow, weeks-long extensions the IRS granted at the time. The court also rejected an IRS regulation that tried to cap this kind of disaster relief at one year, citing the U.S. Supreme Court’s 2024 decision reining in the deference courts give federal agencies. A separate law Congress passed in late 2025 points in the same direction.

The practical upshot: if a return or payment was due anytime inside that window, the court’s reasoning says it was not actually late until after July 10, 2023. That means failure-to-file, failure-to-pay and estimated-tax penalties — along with the interest that ran with them — may have been charged when nothing was overdue. Taxpayers who paid them could be owed a refund or an abatement. In plain terms, the years most likely in play are 2019 through 2022, and the door is open to individuals, businesses and nonprofits alike.

The hurdles

The ruling is real, but it is not the last word, and Elliott was careful not to oversell it.

It is a trial-level decision, and the government has appealed it to the U.S. Court of Appeals for the Federal Circuit, filing notice on May 15, 2026. The IRS has signaled it does not intend to honor the broad deadlines on its own and is expected to deny or freeze claims while the appeal plays out — a process that could take years. Nothing is automatic; the IRS will not send a check, or even a reminder.

And there is a hard deadline. The three-year clock to claim a refund runs out on July 10, 2026. Miss it, and no later court ruling can reopen the door.

“There’s a catch, right?” Elliott said. “The catch is that you have to file the form by July 10th.”

What people can do now

Elliott’s first piece of advice costs nothing. Before paying anyone, she said, taxpayers should pull their own IRS records to see what they were actually charged.

“The first thing you have to do is know what to name the monster,” she said. “You go on, you find out, okay, this is what they’ve got, and this is what they’re coming after you for.”

She recommended setting up a free ID.me account at IRS.gov, which lets people view their own transcripts and payment history. “You can go on yourself instead of paying me 50 bucks to do it,” she said. “Visiting IRS.gov doesn’t mean you’re handing over your information. It’s just a website.”

If the records show penalties or interest from the disaster window, the next step is a protective claim — a placeholder filing, generally on IRS Form 843, that preserves the right to a refund while the appeal is decided. For a protective claim, Elliott noted, the IRS does not require exact figures; a reasonable estimate, paired with a clear statement that the claim is based on the Kwong ruling, is enough to get in line. Tax professionals caution that the basis for the claim should be stated carefully, because the IRS can penalize claims it considers groundless.

Elliott, who said her office is prepared to handle a high volume of filings before the deadline, framed the whole thing as a matter of standing your ground. “If you go in with all your ducks in a row, and you know what laws you’re citing, they don’t have a leg to stand on,” she said.

She is not the only one urging people to look. The National Taxpayer Advocate, an independent watchdog inside the IRS, has flagged the same deadline and written that the goal is to reach as many taxpayers as possible and avoid a gap between the “well advised” and the unaware.

The bottom line

Anyone who paid a late-filing, late-payment or estimated-tax penalty — or interest on a balance due — for tax years roughly 2019 through 2022 may want to check their records and talk with a tax professional before July 10. Whether filing a protective claim makes sense depends on individual circumstances, and the law remains unsettled.

Elliott’s Liberty Tax office on Main Street is keeping offseason hours, Monday through Thursday from 10 a.m. to 2 p.m.

This story is general information and is not tax or legal advice.