Steven Klitzner with Florida Tax Solvers joined Good Morning Keys on Keys Talk 96.9/102.5FM yesterday morning to talk about a recent federal court ruling that could help taxpayers.
The ruling could allow taxpayers to recover penalties and interest paid on late federal tax returns filed during the COVID-19 pandemic. The decision in the Kwong case has created a potentially significant opportunity for taxpayers who filed returns for tax years 2019 through 2022 after their traditional April deadlines but before July 10, 2023.
“The taxpayer won in the Court of Claims,” Klitzner said. “The court found that because of the COVID national emergency, those returns were actually due July 10, 2023. That means if you filed and paid before that date but were charged penalties and interest, you may be entitled to a refund.”
The Internal Revenue Service has appealed the decision, meaning the case could eventually be decided by a federal appeals court or even the U.S. Supreme Court. However, taxpayers who may qualify should not wait for a final ruling.
Klitzner said taxpayers seeking to preserve their rights should file a protective refund claim by July 10, 2026, to avoid potentially losing their opportunity to recover money if the courts ultimately uphold the ruling.
“There’s billions of dollars at stake,” Klitzner said. “The IRS appealed immediately, but under the refund statute, if you don’t file your protective claim by July 10, you may lose your right to any refund.”
The ruling centers on pandemic-related disaster relief provisions that extended certain federal tax deadlines during the COVID-19 emergency. Klitzner said the court concluded those extensions effectively moved the filing deadline for affected tax years to July 10, 2023.
His office is already preparing protective claims for many clients, with potential refunds ranging from several thousand dollars to hundreds of thousands of dollars.
“We have clients whose potential refunds range anywhere from $5,000 to $500,000,” Klitzner said. “One corporation alone has roughly a half-million dollars in penalties and interest at stake.”
Klitzner noted that because the case is still on appeal and IRS guidance remains limited, filing the paperwork correctly is critical.
“This is one of those situations that’s very technical,” he said. “We’re taking extra precautions because if the IRS ultimately loses the appeal, they’re likely to scrutinize every claim.”
Taxpayers who paid IRS penalties or interest on returns for tax years 2019, 2020, 2021 or 2022 may wish to consult a qualified tax professional promptly to determine whether they qualify and whether a protective refund claim should be filed before the July 10 deadline.
For more information, click here: https://floridataxsolvers.com/