2023 Tax Year COVID Penalty Refund

Why 2023 matters specifically

The federal public health emergency ended May 11, 2023. Under IRC § 7508A(d), the disaster suspension period extends past the official end date by a statutory tail, producing a window broadly running from January 20, 2020 through July 10, 2023. The November 2025 Court of Federal Claims decision in Kwong v. United States, 179 Fed. Cl. 382, treated that period as the relevant suspension window for filing and payment deadlines.

2023 individual income tax returns (Form 1040) were not due until April 15, 2024 — well after the disaster window closed. Penalties on those returns are not Kwong-eligible under the current reading. The narrow 2023 universe that may qualify is limited to returns with deadlines or assessments inside the early-2023 window: Q1 2023 Form 941 (employer payroll), Form 940 (annual federal unemployment), and certain prior-year balance assessments posted in early 2023.

The Kwong ruling is currently being appealed; eligibility is not guaranteed. A protective Form 843 filed before the relevant § 6511 deadline preserves the claim. For 2023 specifically, refund-claim windows are not yet deadline-sensitive — but the protective filing positions you to benefit from any future expansion of the Kwong reading.

2023 penalties that may qualify for refund

• Q1 2023 Form 941 deposit penalties under IRC § 6656 (TC 186 / TC 180) — Q1 2023 941 was due April 30, 2023, inside the window.
• Q1 2023 Form 941 failure-to-file or failure-to-pay (TC 166 / TC 276) — assessments before July 10, 2023.
• Form 940 (annual FUTA) for tax year 2022 due January 31, 2023 — assessments before July 10, 2023.
• Prior-year balance assessments — § 6651 or § 6654 amounts posted in early 2023 against 2019, 2020, 2021, or 2022 balances.
• Underpayment interest (TC 196 / TC 340) accrued before July 10, 2023.

Filing deadline for 2023 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 2023 in-window assessments:

• A Q1 2023 Form 941 filed April 30, 2023 has a 3-year window that closes on or around April 30, 2026 — close to the July 10, 2026 disaster-window deadline.
• 2023 individual returns filed in April 2024 have 3-year windows that close in 2027 — not yet deadline-sensitive, but they are also not Kwong-eligible under the current reading.
• The § 7508A(d) suspension under Kwong may further extend in-window claim windows.

What to look for on your 2023 transcript

Pull the relevant transcript — see our transcript guide. For 2023 employment-tax accounts, look at the Form 941 transcript by quarter. For 2023 balance-due assessments tied to prior years, review the prior-year transcript for early-2023 entries.

• TC 150 on a Q1 2023 Form 941 — the return assessment.
• TC 186 / TC 180 — § 6656 deposit penalty for Q1 2023.
• TC 166 / TC 276 — failure-to-file / failure-to-pay on Q1 2023.
• TC 196 / TC 340 — underpayment interest accrued before July 10, 2023.
• TC 670 — payment.

Only entries with 23C dates on or before July 10, 2023 are Kwong candidates under the current reading.

Worked example: a Q1 2023 Form 941 filer with a deposit penalty

Consider a small employer that owed $42,000 in Q1 2023 federal employment taxes, was required to deposit twice in March 2023, and missed both deposits. The IRS assessed an IRC § 6656 deposit penalty of $4,200 (10% of the missed deposits) with a 23C date of June 19, 2023, plus interest. The employer paid the assessed balance in August 2023.

The 23C date (June 19, 2023) is inside the disaster window. The 3-year-from-filing window closes around April 30, 2026, and the § 7508A(d) suspension under Kwong may extend further. A protective Form 843 referencing IRC § 7508A(d), Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025), and the TC 186 entry preserves a $4,200 refund claim plus the in-window interest.

Common 2023 scenarios

2023 individual return penalty — not Kwong-eligible

Penalties assessed on a 2023 Form 1040 (filed in April 2024 or later) are outside the COVID-19 disaster window under the Kwong reading. The 2023 individual filing year is not a Kwong opportunity, though reasonable-cause abatement remains available on its own terms.

Q2 2023 Form 941 — outside the window

Q2 2023 Form 941 was due July 31, 2023 — after the July 10, 2023 cutoff. Penalties tied to Q2 2023 fall outside the Kwong window under the current reading.

"Preserved option" filer for future Kwong developments

Some taxpayers with 2023 in-window assessments file a protective Form 843 now to preserve the option in case future legal developments expand or affirm the Kwong reading. Because 2023 § 6511 windows are not yet deadline-sensitive, this is a low-urgency but high-optionality filing.

Prior-year balance assessed against your account in early 2023

Where the IRS assessed a § 6651 or § 6654 amount in early 2023 against a prior-year balance (2019, 2020, 2021, or 2022), the 23C date is what matters for the Kwong analysis. If the assessment posted on or before July 10, 2023, it may be a Kwong candidate even though the underlying tax year is earlier. The protective Form 843 should reference the prior-year tax year and the 2023 assessment date together.

Form 940 (annual FUTA) for tax year 2022 due January 31, 2023

Form 940 reports federal unemployment tax annually. The 2022 Form 940 was due January 31, 2023 — inside the disaster window. Late-filing or late-payment penalties on the 2022 940 assessed before July 10, 2023 may be Kwong candidates, particularly for employers who missed the January deadline and paid in spring 2023.

How PenaltyBack handles 2023 claims

We pull the relevant IRS transcripts (employment tax, business income tax, individual), segregate the narrow set of 2023 in-window assessments, and draft a Form 843 protective claim that references IRC § 7508A(d), Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025), and the specific transaction codes inside the window. 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 2023 claims

Is it too early to file a protective claim for my 2023 penalty?

For in-window 2023 assessments (those with 23C dates on or before July 10, 2023), filing now preserves the claim. § 6511 windows for 2023 are not yet imminently expiring, but earlier filing positions the claim for any favorable Kwong appeal outcome.

My 2023 refund-claim deadline isn't until 2027 — why file now?

Because the § 7508A(d) suspension theory in Kwong may interact with claim timing in unexpected ways, and the July 10, 2026 deadline applies to the broader Kwong opportunity. Filing now also lets us batch the 2023 claim with any earlier-year claims you have.

Does Kwong apply to 2023 returns at all, given the disaster declaration ended in 2023?

Yes — but only for assessments with 23C dates on or before July 10, 2023. Most 2023 individual returns fall outside that window.

What if the Kwong appeal narrows the ruling — does my 2023 claim still matter?

The protective claim preserves the procedural right and keeps you positioned for whatever theory the courts ultimately accept. If the appeal narrows the ruling significantly, the protective claim costs you nothing (no-win, no-fee).

Should I wait for the Kwong appeal to resolve before filing my 2023 claim?

No. § 6511 windows can close while the appeal is pending. The protective claim is intended exactly for this situation — it preserves your right while the legal landscape evolves.

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.