United States nomads can claim refunds for IRS penalties through July 10

What the ruling changes for IRS penalties

A U.S. Court of Federal Claims ruling in Kwong v. United States said the IRS improperly assessed some penalties and interest on tax obligations due between Jan. 20, 2020 and July 10, 2023. The case covers failure-to-file penalties, failure-to-pay charges and underpayment interest tied to the federal COVID-19 disaster period.

The IRS is appealing, so refunds aren't automatic. Still, the National Taxpayer Advocate has urged taxpayers to file protective claims now to keep their rights alive while the case works through court.

Who may be affected

The ruling could matter for U.S. expats, self-employed nomads, small business owners abroad and other taxpayers who filed late, paid late or missed estimated tax deadlines during the pandemic window. It can also apply to penalties already assessed and paid.

It does not cover every tax penalty. FBAR, Form 5471, Form 3520 and Form 8938 penalties fall under different rules and are outside this case.

What to do before the deadline

Taxpayers who may qualify should file IRS Form 843 by July 10, 2026 and label it “Protective Refund Claim per Kwong v. United States.” The form should go by certified mail to the return-filing service center, along with transcripts, proof of payment and a short explanation of the penalty or interest at issue.

Checking an IRS transcript first can show whether penalties or interest were assessed during the covered period. Processing may take 3 to 6 months or longer and complex expat cases may need professional help.

Read our full United States guide for the complete picture.