PenaltyBack vs Filing Yourself: Which Path to a COVID-Era IRS Refund Makes Sense for You?

In one paragraph

Filing a Form 843 protective claim yourself takes most taxpayers 2–4 hours per affected year: pulling and reading the IRS account transcript, identifying penalty transaction codes, cross-referencing assessment dates with the COVID disaster window, calculating the dollar amounts, drafting the line-7 explanation, signing, and mailing certified. PenaltyBack does the same workflow automatically — 5–7 business days turnaround, $0 upfront, and a fee only if a refund is actually recovered. The DIY path costs roughly $10 per year in postage regardless of outcome.

The two paths at a glance

Sources: IRS Form 843 instructions; Taxpayer Advocate guidance on protective claims; PenaltyBack live homepage. Refund eligibility is not guaranteed; the Kwong v. United States ruling is currently being appealed.

Path A: Filing yourself — what's actually involved

The DIY path is well-trodden. The IRS publishes Form 843 and its instructions, the Taxpayer Advocate has issued guidance on protective claims, and the underlying analytical work is achievable for a taxpayer comfortable with tax-form mechanics.

1. Verify identity with the IRS. Required to pull the transcript online. ID.me or SADI takes 15–30 minutes for first-time setup.
2. Pull the Account Transcript for each affected year (typically 2019–2022).
3. Identify penalty transaction codes (166, 270/276, 196, 170, 240, etc.).
4. Cross-reference each assessment with the disaster window (Jan 20, 2020 – July 10, 2023).
5. Sum the in-window penalties, subtracting any abated amounts.
6. Decide refund claim vs protective claim. Taxpayer Advocate has recommended protective claims while Kwong is on appeal.
7. Draft Form 843 with protective-claim header and line-7 explanation.
8. Sign and mail certified with return-receipt requested.
9. File copies of everything — Form 843, certified receipt, return-receipt card.

Path B: Using PenaltyBack — what's actually involved

PenaltyBack is a product of TaxNow, an IRS-permissioned tax-data provider with view-only access to IRS account transcripts via the IRS e-Services system at the Circular 230 level.

1. Free eligibility check at /get-started. ~2 minutes.
2. One-time IRS authorization. View-only access to the transcripts. PenaltyBack never makes changes to the IRS account.
3. Automated transcript review. Pull, identify penalties, cross-reference dates, calculate.
4. Form 843 preparation. Per the live homepage: "We handle the rest, including mailing the claim."
5. Certified mailing. Establishes filing date for the § 6511 deadline.
6. Wait. IRS response 6–9 months. PenaltyBack's prep phase: 5–7 business days.

Cost: $0 upfront. Fee is a percentage of any refund recovered. If no refund is recovered (no eligible assessments OR Kwong overturned on appeal), the taxpayer owes nothing. From the live FAQ: "If the rulings are upheld, your claim is already in the system. If they're overturned, you owe nothing."

Time investment, in detail

The IRS publishes an estimated taxpayer time burden in the Form 843 instructions: 1 hour 11 minutes for "preparation, copying, assembling, and sending the form" per claim. That excludes reading the transcript and computing in-window amounts. Practitioner experience suggests realistic per-year DIY time is 2–4 hours.

Cost, in detail

• DIY out-of-pocket: ~$10 per claim in postage and certified-mail fees, regardless of outcome.
• PenaltyBack out-of-pocket if no refund: $0.
• PenaltyBack out-of-pocket if refund recovered: a percentage of the recovered amount, paid only after the IRS issues the refund.

Risk of missed eligible amounts

1. Missed quarterly estimated-tax penalties. Estimated-tax assessments span multiple quarters; identifying in-window installments requires granular analysis.
2. Missed extended-deadline assessments. Returns filed under extensions extended by IRS COVID notices have due dates that can differ from transcript-implied dates.

Practitioner-prepared claims have a lower error rate for these specific patterns. PenaltyBack's automated review surfaces both edge cases by default.

When each path tends to make sense

Filing yourself tends to fit well when:

• The taxpayer is comfortable reading IRS account transcripts.
• Only one or two tax years are affected.
• The penalty assessments are straightforward FTF or FTP.
• The potential refund is small enough that the percentage fee outweighs the time-burden delta.
• The taxpayer values learning the underlying mechanics.

Using PenaltyBack tends to fit well when:

• Multiple tax years are affected (2–3+).
• The account includes international information return penalties (Forms 8938, 5471, 5472, 1099, 1095).
• The account includes quarterly estimated-tax penalties.
• The taxpayer's billable-hour rate makes time investment a meaningful factor.
• The taxpayer wants the certified mailing logistics handled.

Frequently asked questions

Does PenaltyBack file the claim faster than I could file it myself?

It depends on the comparison: PenaltyBack's prep phase is 5–7 business days; a focused taxpayer can probably draft and mail a single-year Form 843 in 2–4 hours. Once mailed, IRS response time is the same regardless of who prepared it — typically 6–9 months.

If I file myself first and the IRS denies the claim, can I switch to PenaltyBack?

PenaltyBack's free eligibility check is independent of prior filings. If the IRS denied a claim because the wording was off, PenaltyBack can prepare a follow-up claim for any tax year still inside the § 6511 window.

What if I am not sure which years have eligible assessments?

The free eligibility check answers exactly that question — it pulls the transcript and tells you the potential refund per year before you decide on a path.

Is PenaltyBack a law firm?

No. PenaltyBack is a tax-services product, not a law firm, and does not provide legal advice.

Does my CPA already do this?

Some CPAs handle Form 843 protective claims; others do not. Worth asking directly.

What's the deadline I'm working against?

For most COVID-era penalty assessments, the IRC § 6511 refund-claim deadline is July 10, 2026.