Loper Bright + Kwong: Why Two Recent Court Decisions Matter for Your IRS Refund Claim
TL;DR
The June 2024 Supreme Court decision in Loper Bright Enterprises v. Raimondo and the November 2025 Court of Federal Claims decision in Kwong v. United States changed how courts read IRS interpretations of disaster-relief statutes. Here is what that means for COVID-era penalty refund claims.
In one paragraph
On June 28, 2024, the Supreme Court decided Loper Bright Enterprises v. Raimondo, overruling the four-decade-old Chevron doctrine that required courts to defer to reasonable agency interpretations of ambiguous statutes. About seventeen months later, in November 2025, the U.S. Court of Federal Claims decided Kwong v. United States, reading IRC § 7508A(d) directly and rejecting the IRS's narrower interpretation. The two decisions together mean that taxpayer challenges to IRS statutory readings now face a friendlier judicial environment — including the COVID-era penalty refund claims at issue in Kwong. The practical implication: a Form 843 protective claim filed before July 10, 2026 may preserve refund rights even while the Kwong appeal is pending.
The two cases at a glance
| Loper Bright Enterprises v. Raimondo | Kwong v. United States | |
|---|---|---|
| Court | U.S. Supreme Court | U.S. Court of Federal Claims |
| Decided | June 28, 2024 | November 2025 |
| Citation | 603 U.S. ___ (2024) | 179 Fed. Cl. 382 |
| What it did | Overruled Chevron deference to agency statutory interpretations | Read IRC § 7508A(d) directly to mean COVID-era IRS deadlines were automatically suspended |
| Status | Final — binding on lower courts | Government appeal pending in the Federal Circuit |
What Loper Bright actually did
For forty years, federal courts evaluated agency interpretations of statutes under the two-step framework from Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). Step one: is the statute ambiguous? Step two: if yes, is the agency's interpretation reasonable? If the answer to both was yes, courts deferred to the agency — even if the court would have read the statute differently on its own.
In Loper Bright Enterprises v. Raimondo, 603 U.S. ___ (June 28, 2024), the Supreme Court overruled Chevron by a 6–3 vote. Chief Justice Roberts, writing for the majority, held that the Administrative Procedure Act requires courts — not agencies — to "decide all relevant questions of law." Courts now interpret statutes directly using ordinary tools of statutory construction, without putting a thumb on the scale for the agency's reading.
The opinion did not say agencies' interpretations are now irrelevant. Courts can still consider an agency's reasoning under the older Skidmore standard, weighing the persuasiveness of the agency's position based on its expertise, the thoroughness of its analysis, and its consistency over time. But agencies no longer get automatic deference simply because Congress wrote an ambiguous statute.
Why this matters for tax cases
Tax law is full of ambiguous statutes. The Internal Revenue Code is, by design, broad enough that the Treasury Department and the IRS issue regulations, notices, and revenue rulings to fill in the operational details. Pre-Loper Bright, those interpretations carried significant weight in court. Post-Loper Bright, they are persuasive at most.
The shift is not merely academic. According to coverage in Tax Notes and Bloomberg Tax after the decision, practitioners expected an uptick in taxpayer challenges to IRS interpretations of disaster-relief provisions, foreign-asset reporting rules, partnership-audit procedures, and other technical areas where the IRS's reading had previously gone unchallenged in court. Kwong, decided seventeen months later, was an early example of that shift in action — though, as the court noted, the statutory text in § 7508A(d) was clear enough that the case did not strictly require the post-Loper Bright framework to come out the way it did.
How Kwong read § 7508A(d) without Chevron deference
The Court of Federal Claims in Kwong v. United States read IRC § 7508A(d) using the ordinary tools of statutory construction — text, structure, and purpose — and concluded that the deadline-suspension language is mandatory and self-executing. The IRS argued the provision required additional Treasury action to take effect for the COVID-19 disaster. Pre-Loper Bright, that argument might have triggered Chevron deference: the statute is arguably ambiguous, the IRS's reading is arguably reasonable, defer.
Post-Loper Bright, the court did not start with deference. It started with the text. The phrase "shall be disregarded" is mandatory. The phrase "determined by the Secretary to be affected" is satisfied by the federal disaster declaration covering the taxpayer's location. The structure of subsection (b), which expressly authorizes a single determination for an entire disaster area, supports the textual reading. The court did not need to find the IRS unreasonable; it just needed to find the IRS wrong, and the post-Loper Bright framework let it do that without a deference detour.
What is at stake for your COVID-era refund claim
Two practical implications for taxpayers who paid penalties or interest on returns whose original due dates fell between January 20, 2020 and July 10, 2023:
- The legal foundation for a Kwong-based refund claim is stronger than it would have been pre-Loper Bright. The Court of Federal Claims rejected the IRS's contrary statutory reading without invoking Chevron deference at all. If the appeal does not succeed, future panels in the Federal Circuit and elsewhere are likely to read § 7508A(d) the same way the Court of Federal Claims did.
- The deadline still does not pause for the appeal. Under IRC § 6511, a refund claim must be filed within three years of the original return's due date or two years from when the tax was paid, whichever is later. For most COVID-era penalty assessments, the relevant deadline is July 10, 2026. The Federal Circuit could take a year or more to decide the appeal — well past the deadline for many claimants. A protective claim filed now preserves the right to a refund regardless of how the appeal resolves.
The Kwong appeal in this context
The U.S. government has appealed Kwong to the U.S. Court of Appeals for the Federal Circuit. The appeal is pending as of the date this article was last updated, with no public timeline for the decision.
Even before Loper Bright, the Federal Circuit was not bound to defer to the IRS in every statutory case — Chevron deference applied only after a finding of statutory ambiguity. After Loper Bright, the Federal Circuit will read § 7508A(d) using ordinary tools of statutory construction, the same way the Court of Federal Claims did. That does not guarantee the appeal upholds Kwong, but it does mean the appellate panel approaches the question in a posture closer to the trial court's than it would have been four years ago.
For taxpayers, the operative posture is the same regardless of how the appeal resolves: file a protective claim now to preserve the right to a refund within the § 6511 window, then wait for the appeal. If Kwong is upheld, the claim moves through the IRS's processing queue. If Kwong is overturned, the claim is denied with no out-of-pocket cost under PenaltyBack's no-win, no-fee model.
Penalties potentially within the Kwong reasoning
The combined Loper-Bright-and-Kwong framework does not change which penalties may be refundable; that question is governed by the text of § 7508A(d) and IRC § 6651. Categories that may fall within the Kwong window include:
- Failure-to-file penalties under § 6651(a)(1)
- Failure-to-pay penalties under § 6651(a)(2) and (a)(3)
- Estimated-tax penalties under §§ 6654 and 6655
- Late-filing penalties on international information returns (Forms 8938, 5471, 5472, 1099, 1095) where the underlying due date fell in the window
- Underpayment interest tied to a payment date inside the suspended window
Frequently asked questions
Does Loper Bright apply only to environmental cases?
No. Loper Bright overruled the Chevron doctrine across the board, not just in the fisheries-regulation case at issue. Tax cases, employment cases, financial-regulation cases, and immigration cases are all affected.
If Loper Bright already overruled Chevron, why do we still need Kwong?
Loper Bright was about the framework courts use to evaluate agency interpretations. Kwong was the first published case applying that framework to IRC § 7508A(d) and the COVID-era IRS notices specifically.
Will the IRS issue automatic refunds based on Loper Bright + Kwong?
The IRS has not committed to automatic refunds. The National Taxpayer Advocate, in the April 30, 2026 blog post, recommended that taxpayers file refund claims themselves — including protective claims — before the § 6511 deadline.
If the appeal overturns Kwong, does Loper Bright still help?
Loper Bright is binding Supreme Court precedent and survives the Kwong appeal regardless of outcome. For protective-claim filers, however, an overturned Kwong typically means the protective claim fails — with no out-of-pocket cost under PenaltyBack's no-win, no-fee model.
Does Loper Bright affect older COVID notices like Notice 2022-36?
Indirectly. The Kwong court found that Notice 2022-36 and Notice 2024-07 provided narrow, time-limited relief but did not satisfy the broader statutory suspension § 7508A(d) requires.
Is this analysis specific to individual taxpayers?
No. The reasoning would apply to any taxpayer the IRS assessed pandemic-era penalties or interest against — individuals, small businesses, large corporations, partnerships, estates, and trusts.
What if I am not sure whether my penalties fall in the Kwong window?
The fastest way to find out is to read your IRS account transcript and check whether the penalty assessment dates fall within January 20, 2020 to July 10, 2023.