2021 Tax Year COVID Penalty Refund

Why 2021 matters specifically

2021 returns were due April 18, 2022 (April 15, 2022 fell on Emancipation Day in DC, so the statutory deadline shifted). Unlike 2019 and 2020, the IRS did not grant a general nationwide postponement for 2021 returns — relief was narrower and largely limited to FEMA-declared regional disasters. Notice 2022-36, which provided automatic abatement for certain late-filing penalties, covered only 2019 and 2020 returns. As a result, 2021 returns filed late typically carry their full assessed § 6651 and § 6654 penalties.

Those assessments mostly date from 2022 and 2023, both inside the COVID-19 disaster window broadly running January 20, 2020 through July 10, 2023. The November 2025 Court of Federal Claims decision in Kwong v. United States, 179 Fed. Cl. 382, read IRC § 7508A(d) to require deadline suspension across that full window. If the appeal affirms Kwong, many 2021 penalties may have been improperly assessed.

The Kwong ruling is currently being appealed; eligibility is not guaranteed. A protective Form 843 filed before the relevant § 6511 deadline preserves the claim.

2021 penalties that may qualify for refund

• Failure-to-file (TC 166 / TC 160) under IRC § 6651(a)(1).
• Failure-to-pay (TC 276 / TC 270) under IRC § 6651(a)(2).
• Estimated-tax (TC 170 / TC 176) under IRC § 6654.
• Information-return penalties (TC 240) under §§ 6721 and 6722 for late 2021 Form 1099, 1095, or international forms.
• Underpayment interest (TC 196 / TC 340).

See failure-to-file vs failure-to-pay for the distinction.

Filing deadline for 2021 refund claims

IRC § 6511 requires the refund claim be filed within (a) 3 years of original return filing or (b) 2 years from the date the tax was paid, whichever is later. For 2021 returns:

• A 2021 Form 1040 filed on April 18, 2022 may have a 3-year window that closes on or around April 18, 2025.
• 2021 returns filed late (e.g., in 2023 or 2024) may have 3-year windows that close in 2026 or 2027.
• If you paid the assessed 2021 penalty later, the 2-year-from-payment window may still be open.
• The § 7508A(d) suspension theory in Kwong may further extend any of these windows for in-window assessments.

File the protective claim now. Confirm specific dates against your transcript before mailing.

What to look for on your 2021 transcript

Pull your 2021 transcript — see our transcript guide. Watch for:

• TC 150 — 2021 return assessment date.
• TC 166 / TC 160 — § 6651(a)(1) penalty.
• TC 276 / TC 270 — § 6651(a)(2) penalty.
• TC 170 / TC 176 — § 6654 estimated-tax penalty (including Q1, Q2, and Q3 2022 installments tied to 2021).
• TC 240 — miscellaneous penalty.
• TC 670 — payment.

2021 penalties with 23C dates on or before July 10, 2023 fall inside the disaster window and may be Kwong candidates. Assessments dated after July 10, 2023 fall outside the suspended-deadline period under the Kwong reading.

Worked example: a 2021 1040 with stacked failure-to-file and failure-to-pay

Consider a self-employed taxpayer who owed $24,000 on his 2021 Form 1040 and filed the return on January 20, 2023, nine months after the April 18, 2022 deadline. The IRS assessed:

• A TC 166 failure-to-file penalty of $5,400 (5% per month, capped at 25% of unpaid tax less the FTP penalty) with a 23C date of February 27, 2023.
• A TC 276 failure-to-pay penalty of approximately $1,080 (0.5% per month for nine months) with the same 23C date.
• TC 196 underpayment interest of approximately $1,400.

All three 23C dates fall inside the disaster window. Notice 2022-36 does not cover 2021, so the assessments stand in full. The taxpayer's § 6511 3-year-from-filing window remains open into 2026. A protective Form 843 referencing IRC § 7508A(d) and Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025), preserves a refund claim of approximately $6,480 in penalties plus the in-window interest.

Common 2021 scenarios

Missed the Notice 2022-36 cutoff

Notice 2022-36 covered 2019 and 2020 only. Many 2021 filers expecting similar relief instead carry their full late-filing assessment. Those assessments are commonly inside the disaster window and may be Kwong candidates.

Advance Child Tax Credit reconciliation triggered a balance due

2021 returns reconciling the Advance Child Tax Credit sometimes produced unexpected balances and resulting late-payment penalties. If the resulting § 6651(a)(2) assessment dates inside the disaster window, the standard Kwong analysis applies.

Filed an extension to October 17, 2022 but still got a penalty

An extension shifts the filing deadline but not the payment deadline. Filers who extended to October 17, 2022 but paid late were assessed § 6651(a)(2) penalties. Assessments dated on or before July 10, 2023 are inside the disaster window.

2021 information-return penalties on 1099-NEC and 1099-K

2021 was the first year of significant 1099-NEC reporting volume and the lead-up to lower 1099-K thresholds. Late-filing or incorrect-information penalties under §§ 6721 and 6722 assessed in 2022 and early 2023 may sit inside the disaster window. These information-return assessments are commonly large because the per-form penalty stacks across hundreds or thousands of forms, and they are a frequently overlooked Kwong category.

2021 international information returns (Form 5471, 8938, 8865)

International information returns for tax year 2021 carry significant per-form penalties under §§ 6038 and 6679. Continuation penalties accrue monthly until the form is filed. Any portion of the assessment dated inside the disaster window may be a Kwong candidate, and the per-form amounts make these among the highest-leverage 2021 protective-claim opportunities.

How PenaltyBack handles 2021 claims

We pull your IRS account transcript, identify in-window 2021 penalty assessments, and draft a Form 843 protective claim referencing IRC § 7508A(d), Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025), and the specific transaction codes. We file under our authorized representative status. Our work is no-win, no-fee. The Kwong appeal is pending; the protective claim preserves your right regardless.

Frequently asked questions about 2021 claims

Notice 2022-36 covered 2019 and 2020 — does anything in Kwong help my 2021 penalty?

Yes. Kwong's § 7508A(d) reading is independent of Notice 2022-36 and applies to in-window 2021 assessments.

My 2021 return was due April 18, 2022 — what is the refund-claim deadline?

The § 6511 3-year window typically closes around April 18, 2025 for returns filed on time, but late filings and payment dates can extend it. § 7508A(d) suspension may push these dates further.

I filed an extension for 2021 — does that affect the Kwong analysis?

An extension shifts the filing deadline but not the payment deadline. Late-payment penalties tied to 2021 may still be Kwong candidates if the 23C date is inside the disaster window.

I paid my 2021 penalty already. Should I still file a protective claim?

Yes. Form 843 covers refund claims for amounts already paid, and the 2-year-from-payment window may still be open.

Does the Kwong ruling apply to underpayment interest for 2021?

Interest accruing on amounts assessed inside the suspended-deadline window may be addressable under the same § 7508A(d) reasoning. Form 843 can claim refund or abatement of both penalty and interest, and we recommend listing each interest accrual separately on the protective claim so that any partial relief in the appeal still captures the broadest possible refund. The IRS interest computation in the disaster window is itself a candidate for challenge under the Kwong reading because interest follows the underlying assessment.

My 2021 employment-tax (Form 941) penalties — do those qualify too?

Yes. 2021 quarterly Form 941 penalties (deposit penalties under § 6656, failure-to-file under § 6651) are commonly assessed inside the disaster window and follow the same Kwong analysis as income-tax penalties. Pull the 941 transcripts by quarter to identify the in-window 23C dates.

Related

For background: Kwong v. United States, explained. For transcript guidance: How to read your transcript. For Form 843 wording: Form 843 protective claim wording. For the deadline: The IRS may owe you money from COVID — file by July 10, 2026.