Government’s Kwong Appeal Explains Its Position on Broad COVID-19 Refund Claims

On September 16, 2026, the federal government filed its appellate brief in the case of Kwong v. United States, a closely watched case that could determine whether taxpayers may rely on COVID-19 disaster relief to revive otherwise time-barred refund claims.

In seeking reversal, the government argues that the Court of Federal Claims transformed temporary disaster relief into a multi-year extension of federal tax deadlines, potentially opening the door to taxpayers to receive tens of billions of dollars of refunds that the government contends they are not entitled to receive.

The brief offers the government’s clearest articulation yet of why it believes that interpretation exceeds the scope of the relief authorized under federal tax law.

The Underlying Dispute

The Kwong litigation involves refund claims filed by Terry W. Kwong for tax years 2007, 2010 and 2011. Generally, Section 6532(a)(1) gives a taxpayer two years after the IRS mails a notice disallowing a refund claim to bring suit against the government.

Kwong filed his lawsuit on February 23, 2023. The issue was whether the COVID-19 disaster-relief provisions postponed the applicable deadline long enough to make that filing timely.

The Court of Federal Claims concluded that they did. In its 2025 decision, the court determined that the mandatory postponement under Section 7508A(d) began January 20, 2020, and continued through July 10, 2023. Because Kwong filed suit before that date, the court found the action timely.

The government disagrees and is asking the Federal Circuit to reverse the decision and dismiss the refund claims as untimely.

The Government’s Primary Argument

The government’s principal argument concerns the difference between an incident date and an incident period.

The government argues that Section 7508A(d) provides only a strictly limited, mandatory 60-day postponement of tax deadlines measured directly from the “incident date” identified in a presidential disaster declaration. According to the government’s brief, the lower court erred by instead relying on the much longer period during which the COVID-19 disaster remained in effect.

Simply put, the government contends that if a disaster declaration identifies January 20 as the incident date, a 60-day postponement would ordinarily run from that date, and the period would therefore end March 20, 2020. The fact that the broader COVID-19 emergency continued for years would not automatically extend that statutory period.

The government also notes that Congress used the term “incident period” in other disaster-related legislation but used “incident date” in Section 7508A(d). In its view, that difference was intentional and should be respected.

The government’s position is supported, it argues, by what Treasury and the IRS actually did during the pandemic. They issued numerous notices providing specific extensions and other relief as circumstances developed. According to the government, that administrative history indicates that Section 7508A(d) was not intended to create an automatic, multi-year suspension of tax deadlines.

The government also points to the description of Section 7508A(d) as a mandatory 60-day extension. Although a statutory heading does not control the operative text, it supports the government’s view that Congress intended a defined period of relief.

The Government’s Alternative Arguments

The government has also offered alternative positions if the Federal Circuit rejects its primary interpretation.

It argues that if the continuing nature of the COVID-19 disaster must be considered, March 22, 2020, should be treated as the relevant incident date for California (the plaintiff was a California taxpayer). Even then, the 60-day period would have ended May 21, 2020 — still substantially earlier than the July 2023 date adopted by the Court of Federal Claims.

The government further argues that even a broader interpretation cannot produce an unlimited postponement. It points to the one-year limitation associated with Section 7508A(a) and related Treasury regulations as an additional constraint.

The government also argues that The Court of Federal Claims’ interpretation could affect tens of millions of taxpayers and expose the Treasury Department to a loss of tens of billions of dollars in refund claims.

Conclusion

The government’s position rests primarily on traditional principles of statutory interpretation: the language Congress enacted, the distinction between terms used in the statute and the need to read Section 7508A as a whole.

While the Kwong litigation remains ongoing, the Federal Circuit’s eventual decision could provide important guidance concerning COVID-era tax deadlines and available tax refund claims.

How Withum Can Help

Although some filing deadlines have passed, opportunities for relief may still exist. Taxpayers who were assessed penalties or interest during the COVID-19 period should speak with a local Withum tax advisor to determine whether they may qualify for penalty abatement, interest relief or other available refund opportunities.