Kwong Ruling - Penalty & Interest Abatement Opportunity

It depends on what you were assessed during the period. We would look for penalties, interest, payment dates, assessment dates, and the tax years involved.

For most taxpayers, the key deadline is July 10, 2026.

No. A refund is not guaranteed. Kwong is a strong taxpayer-favorable decision, but the IRS disagrees with the broader interpretation. If the government ultimately wins, the IRS may deny these claims.

You should expect this to take time. Protective claims are often held while the legal issue is being resolved. Filing a protective claim now protects your place in line before the statute of limitations expires.

Yes. Kwong is not a crypto issue. It is an IRS penalty and interest issue. Whether your income came from wages, business income, investments, real estate, crypto, or something else, we can review your transcripts and determine whether a protective claim is needed.

Not automatically. Kwong is a federal case involving federal tax deadlines and IRS penalties. Some states had their own COVID relief rules, but each state has to be reviewed separately. State-level claims may exist, but the rules vary by state.

If the IRS has already removed the penalty, we cannot ask for a refund of an amount you no longer paid or owe. But I would still review your IRS transcript. Sometimes the IRS removes one penalty but leaves related interest, another penalty, or another tax year untouched.

When filing a protective claim you are asking the IRS to preserve your refund or abatement rights on a specific penalty or interest issue. The IRS can review the claim, ask for support, or deny it, but the claim itself is only focused on the penalty and interest issue.

You can still take advantage of this ruling and have your balance due reduced by the amount of the approved claim.

No, it is not yet final. The Court of Federal Claims issued the decision, but the government is expected to challenge it. That is exactly why we file a protective claim. We preserve your right to a refund if the courts ultimately uphold the Kwong position.

You may be affected if you filed a tax return late between January 20, 2020 and July 11, 2023, paid penalties for filing or paying late during that period, owe IRS penalties you haven't yet paid, or filed an international information return late. This isn't a niche issue; it affects individuals, small businesses, large corporations, estates, and trusts, and can involve income, employment, estate, gift, and excise taxes.

Possibly. The deadline to file a refund claim is generally the later of: (1) three years from when your return was due, or (2) two years from when you paid the penalty or interest. For most taxpayers, the three-year rule gives a July 10, 2026 deadline. But if you paid the penalty more recently, for example, in mid-2025,  the two-year rule could give you until 2027. We review your payment dates to identify the latest applicable deadline.

A refund claim asks the IRS to return money you've already paid. An abatement request asks the IRS to remove or reduce an unpaid amount the IRS says you owe. The deadline rules differ between the two, and whether you've paid the penalty determines which type of claim you need.

For Kwong-related claims involving penalties and interest only (not revising your underlying tax liability), IRS Form 843, "Claim for Refund and Request for Abatement," is generally used. For protective claims specifically, the form is marked with language such as "Protective Refund Claim Pursuant to Kwong Case." A separate Form 843 generally must be filed for each tax period and each type of tax. We handle all of this on your behalf.

Three basic steps: (1) look for penalty or interest charges on your transcript (failure-to-file, failure-to-pay, or estimated tax penalties); (2) note the dates associated with those charges; (3) check whether those dates fall between January 20, 2020, and July 11, 2023. Transcripts are available through your Individual Online Account at IRS.gov. Reviewing transcripts is part of what we do for Tax Shield Full Defense members.

An Enrolled Agent (EA) is a federally licensed tax practitioner authorized by the U.S. Department of the Treasury to represent taxpayers before the IRS. EAs earn this credential by passing a comprehensive three-part IRS examination covering individual and business tax, or through qualifying experience as a former IRS employee. They must also complete continuing education each year to maintain their license. Unlike CPAs and attorneys, who are licensed by states, EAs are licensed at the federal level, meaning an EA can represent any taxpayer on any tax matter in any state. EAs have the same rights as attorneys and CPAs to represent clients in IRS audits, appeals, and collection matters. All Kwong-related claims at CryptoTaxAudit are handled by Enrolled Agents.