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COVID-19 Extended Tax Deadlines Longer Than Many Realized – Houston Tax Attorneys


Taxpayers have various tax filing deadlines throughout the year. Missing one can trigger penalties, interest charges, and collection actions.

When there is a major disaster, the IRS typically grants short extensions to give affected taxpayers breathing room. During the COVID-19 pandemic, the IRS issued notices extending various tax deadlines by a few months. The agency moved the April 15, 2020 deadline to July 15, 2020, for example. Most taxpayers and tax advisors assumed these specific notices defined the full extent of available relief.

What if the law actually provided a much longer extension than the IRS provided? A recent case from the Court of Federal Claims says that is exactly what happened. In Kwong v. United States, No. 23-271T, (Fed. Cl. Nov. 25, 2025), the court held that statutory relief extended certain tax deadlines until July 2023—years beyond what the IRS had publicly announced in its COVID-19 disaster declarations.

Facts & Procedural History

The taxpayer owned and managed real estate through his business. In 2005, he bought out his co-owners and became the sole owner. As part of that transaction, he refinanced the business property. On advice from his tax attorney and accountant, he claimed a loss of over $2.3 million on his 2005 tax return. He carried that loss forward to subsequent years, including 2007, 2010, and 2011.

The IRS audited the tax return for 2005 and disallowed the loss in 2012. This resulted in additional tax liabilities for the years to which he had applied the loss. The IRS simultaneously assessed delinquency penalties for those tax years in April 2012 for the 2007 tax period and later for 2010 and 2011. The taxpayer also had penalties for tax years 2015 and 2016 related to underwithholding taxes throughout those years.

In 2020, the taxpayer filed penalty abatement requests seeking refunds of the penalties he had paid for each of the 2007, 2010, 2011, 2015, and 2016 tax years. The IRS issued notices of disallowance for his 2007, 2010, and 2011 claims in September and October 2020. The taxpayer filed his complaint to start the tax litigation in February 2023 in the U.S. Court of Federal Claims seeking refunds of the penalties for all five tax years.

The government moved for summary judgment. It argued that the claims for 2007, 2010, and 2011 were untimely because the taxpayer filed suit more than two years after the IRS denied his claims. The government also argued that the IRS had correctly assessed penalties for 2015 and 2016. The taxpayer responded that his suit was timely because of statutory extensions under COVID-19 emergency relief legislation. This defense triggered extensive briefing on whether and how the pandemic extended his deadline to file suit.

The Two-Year Deadline for Tax Refund Suits

Section 6532 of the tax code provides strict time limits for filing suit to recover taxes or penalties. It generally says that a taxpayer cannot file suit “after the expiration of 2 years from the date of mailing . . . of the disallowance of the part of the claim to which the suit or proceeding relates.” This two-year window begins when the IRS formally denies a refund claim. Miss that deadline and the courthouse doors close.

The Federal Circuit has long held that Section 6532’s deadline is jurisdictional. This means courts lack power to hear cases filed after the two-year period expires. The jurisdictional nature of the deadline prevents equitable tolling—the doctrine that allows courts to extend deadlines when extraordinary circumstances beyond a party’s control prevent timely filing. Courts cannot create extensions based on fairness or hardship.

However, jurisdictional deadlines can still be extended by statute. Section 6532 itself recognizes this possibility. The statute provides that the two-year period “shall be extended for such period as may be agreed upon in writing between the taxpayer and the Secretary.” Congress can likewise extend these deadlines through legislation addressing specific circumstances.

Section 7508A: The Disaster Relief Statute

Section 7508A gives the Secretary of the Treasury authority to postpone tax-related deadlines during disasters.

Congress enacted Section 7508A to address natural disasters that temporarily disrupt taxpayers’ ability to meet their obligations. The typical scenario involves hurricanes, floods, or wildfires. These events damage infrastructure, displace populations, and make compliance impossible for defined periods. The statute typically operates for short time periods. A hurricane makes landfall, causes destruction over several days, and the affected area begins recovery. The IRS issues a notice extending deadlines by a few months to give taxpayers time to get back on their feet.

The statute allows the Secretary to “specify a period of up to 1 year that may be disregarded” during a taxpayer’s deadline to file returns, pay taxes, or bring suit for refunds. This discretionary authority under subsection (a) lets the Secretary respond flexibly to emergencies.

The statute also includes an automatic extension provision in subsection (d). This mandatory extension applies without any action by the Secretary. Under the version in effect before November 2021, the automatic extension ran from “the earliest incident date specified in the declaration” to “the date which is 60 days after the latest incident date so specified.” Unlike the discretionary extension under subsection (a), the mandatory extension under subsection (d) contained no express time limit in the pre-2021 version.

The mandatory extension in subsection (d) historically operated in tandem with the discretionary extension. For a typical disaster, the mandatory 60-day extension might run from the disaster’s start through 60 days after its end. This might total three or four months. If taxpayers needed more time, the Secretary could exercise discretionary authority under subsection (a) to extend deadlines up to a year. This two-tier system worked well for localized, short-term emergencies. No one anticipated how it would function during a multi-year national pandemic.

How the Statute Changed in 2021

Congress amended Section 7508A in November 2021. Understanding which version applies requires careful attention to effective dates and statutory language. This proved to be the key issue in Kwong.

The original 2019 version of subsection (d) stated that the mandatory extension period ran from “the earliest incident date specified in the declaration” to “the date which is 60 days after the latest incident date so specified.” This language tied the extension’s length directly to the disaster declaration itself. If the declaration said the disaster lasted from Date A to Date B, the mandatory extension ran until 60 days after Date B. The statute imposed no cap on how long that period could last.

In November 2021, Congress amended subsection (d). The new version changed the end of the extension period from “the date which is 60 days after the latest incident date so specified” to “the date which is 60 days after the later of such earliest incident date . . . or the date such declaration was issued.” This amendment effectively capped the mandatory extension at 60 days maximum. The extension would end 60 days after either the disaster’s start or the declaration’s issuance, whichever came later.

This change matters in this case. Under the 2019 version, a disaster that lasted three years would trigger an extension that lasted three years plus 60 days. Under the 2021 version, that same disaster would trigger only a 60-day extension. The question in this case is which version applies to COVID-19?

The answer depends on when the disaster was declared. The November 2021 amendment applied only “to federally declared disasters declared after the date of enactment of this Act.” The COVID-19 disaster was declared in early 2020. Therefore, the 2019 version of Section 7508A governs COVID-19 cases. The government initially argued that the 2021 amendment should apply retroactively to COVID-19. Only after the court pressed the issue did the government concede that the amendment’s effective date provision barred retroactive application.

When Did the COVID-19 Emergency Begin and End?

On March 13, 2020, President Trump declared a nationwide emergency. On March 22, 2020, he declared California, where this taxpayer resided, a major disaster area “beginning on January 20, 2020, and continuing” due to pandemic conditions. The Federal Emergency Management Agency coordinated the response.

That phrase “beginning on January 20, 2020, and continuing” became the linchpin of the Kwong decision. The declaration established January 20, 2020 as the “earliest incident date.” But what was the “latest incident date”? The declaration said the emergency was “continuing.” This suggested no fixed end date at the time of issuance.

The pandemic emergency declaration remained in effect for over three years. On February 10, 2023, the government amended the declaration to close the incident period effective May 11, 2023. This amendment established May 11, 2023 as the “latest incident date” for purposes of Section 7508A.

Under the plain language of the 2019 statute, the mandatory extension ran from January 20, 2020 through July 10, 2023. The latter date represents 60 days after May 11, 2023. This created an extension period of roughly three and a half years. No one anticipated such a duration when Congress drafted Section 7508A.

Does “Continuing” Mean There Was No Specified End Date?

The government argued that because the initial declaration said “continuing” rather than specifying an end date, only January 20, 2020 qualified as a date “so specified” under the statute. According to this reading, both the earliest and latest incident dates were January 20, 2020. This would yield only a 60-day extension from that single date.

The Kwong court rejected this argument. The word “continuing” has meaning. If the declaration was meant to cover only January 20, 2020, it would not have added “and continuing.” The government’s choice to maintain the disaster declaration beyond January 20, 2020 demonstrated that the emergency period extended far beyond that initial date. The government kept the declaration in effect for more than three years. This active maintenance of the declaration showed that the emergency continued throughout that period.

The government relied on Abdo v. Commissioner, 162 T.C. 148 (2024), for support. In Abdo, the Tax Court addressed whether COVID-19 extended certain filing deadlines. The court held that taxpayers who filed within 60 days of January 20, 2020 had filed timely. But Abdo did not address whether the extension could last longer than 60 days. The taxpayers there had filed within the initial 60-day window. The Tax Court explicitly noted: “We need not, and therefore do not, express a view on what the outer limits of the extension period may be where a declaration omits an ending date or is extended.”

The Kwong court thus faced a question Abdo left open. The court concluded that the declaration’s use of “continuing” meant the emergency period extended as long as the declaration remained in effect. When the government amended the declaration in February 2023 to close the incident period on May 11, 2023, that date became the “latest incident date” under the statute. The mandatory extension therefore ran until 60 days after that date.

How This Applied to the Taxpayer’s Refund Suit

The taxpayer’s deadline to file suit began when the IRS denied his refund claims in September and October 2020. Under normal circumstances, he would have had until September or October 2022 to file suit. This represents the two-year period from the denial date under Section 6532. He filed in February 2023—several months after that normal deadline expired.

But the COVID-19 mandatory extension under Section 7508A lasted until July 10, 2023. Section 7508A allows affected taxpayers to “disregard” deadlines that fall within the extension period. The taxpayer’s September and October 2020 denial notices triggered deadlines that would normally expire in September and October 2022. Those expiration dates fell within the January 2020 to July 2023 extension period. Therefore, the taxpayer could disregard those deadlines until the extension period ended.

When the July 2023 extension period ended, the taxpayer’s two-year clock to file suit would have started running again. Because he filed in February 2023—well before July 2023—his suit was timely. This analysis applies regardless of whether we characterize Section 7508A as providing tolling or a postponement period. Tolling pauses the clock while postponement moves the deadline. Either characterization leads to the same result here.

The court granted summary judgment in the taxpayer’s favor on the timeliness issue for tax years 2007, 2010, and 2011. This means his refund claims for those years can proceed to address their merits. Whether he ultimately wins those refunds depends on whether the IRS properly assessed the underlying penalties. The court did not reach that question in its summary judgment decision. The parties will need to litigate the substantive penalty issues at trial or through further proceedings.

The Takeaway

The Kwong decision explains that the COVID-19 emergency extended tax deadlines far longer than the IRS’s public guidance suggested. The mandatory extension under Section 7508A’s pre-2021 version ran from January 20, 2020 through July 10, 2023. This extension applied automatically to any taxpayer affected by the declared disaster. It operated regardless of whether the IRS issued specific guidance for particular situations. The practical impact remains viable for some taxpayers even to today. By late 2025, a taxpayer seeking to invoke the July 2023 extension would need to have had a deadline fall during the COVID-19 period. They would then need to have acted quickly enough after July 2023 to file claims while their own limitations periods remained open. Most such claims have now expired through the passage of time, but those who filed during this time, even if late, may benefit. This may preserve claims the government thought time-barred.

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Tax Planning for Net Operating Loss Carryback Elections – Houston Tax Attorneys


Congress has used Section 172 for net operating losses to stimulate the U.S. economy. It has done this by allowing certain losses to be carried back, thereby generating cash refunds to the taxpayer. This puts cash into the hands of taxpayers who are suffering losses. One only has to look at the history of changes to Section 172 to see this history.

One such allowance was for specified liability losses. These are losses that were specifically listed in Section 172 and allowed to be carried back to prior tax years. Environmental remediation costs were an example. When an oil and gas company has a drilling platform that needs dismantling or contaminated land requires cleanup, the tax loss can generate cash to help pay for these often extraordinary expenses.

The question hasn’t been clear in the various machinations of Section 172 is what happens when there are different loss carryback rules at play for a taxpayer in the same tax year. Can the taxpayer have two net operating loss carrybacks from the same tax year, to different prior years? The specified liability loss rules provide an example, as they had a 10 year carryback, whereas general losses had a two year carryback. So if a taxpayer incurred both in the same year, could they carry back 10 years and two years?

This brings us to Apache Corporation v

This brings us to Apache Corporation v. Commissioner, 2025 T.C. 11, which addresses this very issue. The tax court case provides important guidance on whether taxpayers can selectively waive certain carryback periods while preserving others–effectively being able to use NOL elections as part of their business and tax planning.

Facts & Procedural History

The taxpayer in this case is an oil and gas exploration and production company. For 2016 and 2017, the company filed consolidated corporate income tax returns showing net operating losses of approximately $1.9 billion and $3.1 billion respectively.

Buried within those massive losses were much smaller amounts that qualified as “specified liability losses” under Section 172(f)(1). In 2016, the taxpayer reported a specified liability loss of $40.7 million. In 2017, it reported $30.8 million. These amounts represented environmental remediation costs, decommissioning expenses, or similar cleanup obligations that qualify for special tax treatment.

The taxpayer made elections on both returns to waive the carryback period under Section 172(b)(3) for its consolidated net operating losses. But the taxpayer explicitly stated it was not electing to relinquish the carryback period for the specified liability losses. The company wanted to carry those environmental losses back the full ten years while carrying the regular losses only forward.

The taxpayer then filed Form 1139 applications seeking tentative refunds. It carried the $40.7 million specified liability loss from 2016 back to 2006, claiming a refund of $13.8 million. It carried the $30.8 million loss from 2017 back to 2007, claiming $10.1 million. The IRS issued both refunds.

Later, during an IRS audit, the government changed its position. The IRS issued a notice of deficiency for 2006 and 2007, disallowing the carrybacks entirely. The IRS’s position was that when the taxpayer elected to waive the carryback period, it waived everything. No cherry-picking allowed.

The taxpayer petitioned the U

The taxpayer petitioned the U.S. Tax Court for redetermination. Both parties filed cross-motions for partial summary judgment on the carryback issue. The case was reviewed by the full court.

Net Operating Losses Under Section 172

Section 172 allows taxpayers to smooth income over time. When deductions exceed gross income in a year, the resulting net operating loss can be carried to other years. This prevents businesses from being overtaxed simply because their profitable and unprofitable years don’t align with the calendar.

The basic mechanism works like this. A net operating loss can be carried back to prior years to offset income that has already been taxed. This generates tax refunds–so cash paid to the taxpayer. Any loss remaining after the carryback can be carried forward to offset future income. The carryback provides immediate cash flow. The carryforward preserves the loss for future use.

Under the default rule in Section 172(b)(1)(A) that applied prior to 2022, net operating losses can be carried back two years and forward twenty years. The taxpayer starts by carrying the entire loss to the earliest possible year. If that year’s income doesn’t absorb the full loss, the excess carries to the next year, and so on until the loss is consumed or exhausted.

This default rule doesn’t work for everyone. Consider a company with significant research tax credits that are about to expire. If it carries losses back to years when it had those credits, the loss will eliminate the income. The credits then sit unused and eventually expire worthless. The company loses twice—once from the operating loss and again from the wasted credits.

Section 172(b)(3) addresses this problem

Section 172(b)(3) addresses this problem. It allows taxpayers to elect to waive the entire carryback period and carry losses only forward. This preserves credits and other favorable attributes in the earlier years while banking the loss for future use. This is similar to rules that allow taxpayers to opt out of bonus depreciation, foregoe immediate expensing, etc.

The Ten-Year Carryback for Specified Liability Losses

Congress recognized that certain losses are particularly large and sporadic. Environmental cleanups don’t occur on predictable schedules. When they do occur, the costs can dwarf regular operating expenses. Limiting these losses to a two-year carryback often means the company can’t fully use them because income in just those two prior years won’t absorb the entire loss.

For the years in this case, Section 172(f)(1) defined specified liability losses to include two categories. First are product liability losses under subsection (A). Second are amounts under subsection (B) that satisfy liabilities under federal or state law for land reclamation, nuclear plant decommissioning, drilling platform dismantlement, environmental remediation, or workers compensation payments.

Under the rules applicable to these years, these losses must meet specific timing and accounting requirements. The deduction must arise from a liability that existed for a substantial period before the deduction year. The liability must be identified in financial statements or tax returns from earlier years. These requirements prevent taxpayers from manufacturing specified liability losses out of ordinary business expenses.

Section 172(b)(1)(C) grants specified liability losses a ten-year carryback period instead of the usual two years. This extended window gives companies a realistic chance to absorb the loss against income from more years. For businesses with cyclical earnings, reaching back ten years instead of two can mean the difference between using the loss fully or losing part of it forever.

The tax code treated specified liability losses as separa…

The tax code treated specified liability losses as separate from the rest of a net operating loss. Section 172(f)(5) provides that for purposes of applying the sequencing rules in Section 172(b)(2), specified liability losses are treated as separate net operating losses to be taken into account after the regular portion. The taxpayer first carries back its regular loss two years, then separately carries back the specified liability loss ten years.

The law has changed since the years at issue here

The law has changed since the years at issue here. The special treatment for specified liability losses described in this case no longer exists. The Tax Cuts and Jobs Act (“TCJA”) eliminated most net operating loss carrybacks effective for losses arising after December 31, 2017. Under current law, specified liability losses receive no special carryback period. They follow the general rule—no carryback at all, only carryforward.

Losses can be carried forward indefinitely but are subject to an 80% limitation on the amount of taxable income they can offset in any given year. Congress provided temporary relief for losses arising in 2018, 2019, and 2020, allowing those losses a five-year carryback. But this temporary provision applied to all net operating losses during those years, not specifically to specified liability losses. The entire framework of extended carrybacks for environmental remediation costs, decommissioning expenses, and similar liabilities has been removed from the tax code.

Setting aside the policy argument for allowing specified liability loss carrybacks, this case is still relevant as to the broader statutory interpretation principles it establishes. The tax court’s analysis applies whenever Section 172(b)(1) provides multiple carryback periods for different types of losses in the same year. For example, farming losses currently receive a two-year carryback under Section 172(b)(1)(B). If Congress enacts future legislation creating additional special carryback periods for particular industries or types of losses, which it has done repeatedly over the years, the court’s reasoning would govern whether taxpayers can waive some carryback periods while retaining others.

The Election to Waive Carryback Periods

With that background, we can get into the election. Section 172(b)(3) states that any taxpayer entitled to a carryback may elect to relinquish the entire carryback period with respect to a net operating loss for any taxable year. The election has to be made by the due date of the return for the loss year. Once made, the election is irrevocable.

The statute uses specific language—”a carryback period” and “the entire carryback period.” Whether these terms refer to one unified period or potentially multiple periods becomes the central interpretive question. If Section 172(b)(1) establishes only one carryback period per loss, then the election necessarily applies to the whole loss. If it establishes multiple periods, then potentially the election could apply to each period separately.

Farmers and certain other taxpayers face similar questions. Section 172(b)(1)(E) allows eligible losses (including casualty losses and disaster-area losses) to be carried back three years. Section 172(b)(1)(F) allows farming losses a five-year carryback. Each of these provisions includes its own election mechanism allowing taxpayers to waive the extended carryback for that particular type of loss.

The question is whether Section 172(b)(3) works the same way. Can a taxpayer with multiple types of losses subject to different carryback periods waive some but not others? Or does the statute require an all-or-nothing choice?

The tax court held that taxpayers entitled to multiple carryback periods under Section 172(b)(1) may waive them individually. The court based this conclusion on statutory text, structure, judicial precedent, and the government’s own prior interpretation.

The tax court agreed with the taxpayer that reading Secti…

The tax court agreed with the taxpayer that reading Section 172(b)(3) as all-or-nothing makes little sense given the number of different carryback periods in Section 172(b)(1). Why would Congress grant taxpayers the flexibility to waive carrybacks entirely but then remove all flexibility to make nuanced choices when multiple carryback periods apply? Section 172(f)(6) provides another example of congressional flexibility.

This provision allows taxpayers with specified liability losses to elect out of the special ten-year carryback and instead use the regular two-year carryback. A taxpayer might make this election if it had sufficient income in the two most recent years to absorb the loss and wanted to preserve attributes in earlier years. The existence of this additional election shows Congress wanted to give taxpayers choices about how to use these losses.

The Takeaway

This case confirms that the NOL rules can create multiple carryback years. Taxpayers can make elections to use their loss carrybacks strategically, which is what Congress likely intended. When a business has both regular operating losses and specified liability losses, for example, it can waive the short carryback period for regular losses while preserving the extended carryback for environmental and decommissioning costs.

This flexibility allows companies to avoid wasting valuable tax attributes in recent years while still obtaining immediate refunds from the special losses. The same principles apply to other losses today. For example, a farm business with both farming losses (which get a two-year carryback) and other business losses could use the Apache framework to selectively waive carrybacks and preserve expiring credits or other tax benefits. This is another tool in the taxpayer’s tax planning toolbox.

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