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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