Millions of Americans may receive a payout from the IRS as part of COVID era relief — key details
The COVID-19 pandemic was a hard time for everybody, and apart from the fear of the virus, it also caused anxiety about employment and financial stability. But there seems to be some relief on the horizon, years later, as millions of Americans could be eligible for an IRS refund from the days of the pandemic. This is thanks to a provision built into the US laws, which states that tax deadlines would be postponed in the case of a disaster. Since the pandemic falls in that category, the IRS might have significant refunds to hand out to Americans.
According to a report in USA Today, if a federally declared disaster is in effect, tax code Section 7508A(d) dictates the postponement of applicable tax deadlines for the duration of the disaster plus an additional 60 days. The report also states that last November, a federal court ruled that the pandemic, which lasted from January 20, 2020, through May 11, 2023, fell under this category. The new tax deadline for tax year 2019, 2020, 2021, and 2022 filings would have been July 10, 2023, after adding the 60 days.
What this also means is that the IRS had no right to levy any penalties during this period, but some people might have been charged with them regardless. Individuals or businesses who faced that are eligible for a refund. The IRS will most likely contest the decision, but taxpayers have been urged to act quickly and apply for such refunds if they were charged a penalty during the aforementioned time period.
"Millions of taxpayers could be eligible, but if people don’t file claims before July 10, 2026, they lose out on the potential for a refund or abatement," said Jon Wasser, partner at Fox Rothschild. Businesses, especially those that faced financial difficulties during the pandemic and were unable to pay taxes, would also be eligible for refunds if they were charged penalties.
"The potential dollar amounts could be significant, particularly for businesses that faced liquidity challenges during the pandemic and incurred substantial failure-to-pay (taxes) penalties," wrote Jessica Marine, partner at Frost Law. People may not be aware if they are owed a refund by the IRS. To check this, they must check their tax records to see if the IRS levied any penalties or interest during the aforementioned period. To claim a refund, one may either hire a tax professional or they could use IRS Form 843 to claim a refund and request an abatement, using information from the tax records.
More on Market Realist:
American taxpayers could pocket bigger refunds this season — but there’s a catch
IRS shared the personal data of thousands of American taxpayers with DHS: Report
Missed the January 31 IRS deadline? Here's all about the penalties you should know
