Some Charlotte taxpayers may be sitting on surprise money without knowing it. A late-2025 federal court ruling, followed by a December change in federal law, suggests that people who paid federal tax penalties or interest tied to the pandemic years might be in line for refunds. The decision treats a key emergency-relief rule as having shut off normal federal filing and payment deadlines from Jan. 20, 2020, through July 10, 2023, effectively shoving many due dates to July 11, 2023. Tax attorneys say that opens the door to challenges, but the window to act is tight.
What the court said
The U.S. Court of Federal Claims, in Kwong v. United States, held that Section 7508A(d) of the Internal Revenue Code, as it existed before a 2021 amendment, automatically postponed tax deadlines for the full length of the COVID-19 disaster plus 60 days. As the opinion posted on Justia explains, the judge concluded that the suspension ran from Jan. 20, 2020, through July 10, 2023. That means many filing and payment deadlines that fell anywhere in that span were legally pushed to July 11, 2023.
In doing so, the court rejected an Internal Revenue Service regulation that tried to cap mandatory postponements at one year, siding instead with the broader reading of the statute.
Why that could mean refunds
Here is why this matters for your wallet: underpayment interest and many tax penalties only start running after a legal due date has passed. If the due date was actually postponed into July 2023, then charges that hit during the supposed “pause” period may not have been valid in the first place. Tax professionals say that could mean refunds for people and businesses that already paid those amounts.
Law firm analysis and tax advisers are urging potentially affected taxpayers to pull their records, review IRS account histories, and file refund claims or amended returns where appropriate, according to Venable. Some law firms and plaintiffs’ attorneys are already lining up claims, and certain large corporate taxpayers have begun actively pursuing refunds.
Local impact in Charlotte
Charlotte-area coverage has stressed that this is not some niche loophole. The potential impact runs nationwide: millions of Americans may have had more time to file and pay than they realized, and tax experts are warning that the financial stakes are significant for both individuals and businesses.
That framing showed up in reporting by WCNC, which also noted that the federal government could still appeal the Kwong decision. If appeals courts step in, some of these potential refunds could end up tied to how those challenges shake out.
How to check and claim
If you think this might touch your returns, start with the basics. Log in to your IRS online account, look over any balance-due notices or penalty letters you received for tax years overlapping the pandemic, and then talk with a tax preparer or advisor who understands the ruling.
For requests to abate penalties or interest, the IRS currently directs taxpayers to use Form 843. For amended-return refund claims, the usual path is Form 1040-X. You can find both on the agency’s website, including the page for Form 843 on the IRS site and the instructions for Form 1040-X through the IRS as well.
Normally, the statute of limitations to claim a refund is three years from when you filed the return or two years from when you paid the tax, whichever is later. Recent legislation and the Kwong ruling can affect how those time limits are counted, so tax professionals are telling people to move quickly rather than waiting until the last minute.
Legal outlook
Congress weighed in last year by passing the Disaster Related Extension of Deadlines Act (H.R. 1491), which became Public Law No. 119-64 on Dec. 26, 2025. The law adjusts how “look-back” periods are calculated when deadlines have been postponed because of disasters, according to Congress.gov. That change is part of the reason the timing of payments and filings now matters so much.
Even with that new statute on the books, the federal government still has routes to challenge the Kwong decision, and appeals are widely expected. Tax lawyers caution that many claims will turn on meticulous documentation and the precise dates of payments and assessments, a point highlighted in analysis by Sullivan & Cromwell.
