COVID-Era IRS Penalty Refund Update

Last month, we shared an article regarding a recent federal court case that may create refund opportunities for certain taxpayers who paid IRS penalties or related interest associated with COVID-era postponed filing and payment deadlines.

Since then, our tax professionals have been reviewing client returns and reaching out to individuals who may benefit from filing a protective refund claim while the litigation remains pending.

If we believe you may be eligible, a member of our tax team will contact you to discuss your situation and, if appropriate, assist with filing a protective refund claim before the applicable filing deadline. For many taxpayers, the deadline to preserve potential refund rights is July 10, 2026.

As a reminder, the underlying case remains ongoing, and the IRS does not currently agree with the taxpayer’s position. Any refund claims will ultimately depend on the outcome of the litigation. Filing a timely protective refund claim may help preserve potential refund rights while the matter is pending.

Our tax professionals are contacting clients who may be eligible. If you believe this opportunity may apply to you and have not yet heard from us, please contact your LMC advisor as soon as possible to discuss your circumstances before the filing deadline.