What Taxpayers Need to Know Before July 10, 2026
If you've paid IRS penalties or interest in recent years, there may be an opportunity worth exploring.
Recent court decisions have raised questions about whether certain IRS penalties and interest charges assessed during the COVID disaster period should have been charged at all. While the legal process is still unfolding, some taxpayers may need to act now to preserve their rights.
The potential opportunity centers around what many tax professionals are calling an IRS penalty refund claim.
At Ken-Mar Tax, we're closely monitoring these developments and helping clients determine whether they may benefit from taking action before important deadlines expire.
What Changed?
During the COVID pandemic, federal disaster declarations affected tax filing and payment deadlines across the country.
Recent court rulings have concluded that a federal law passed before the pandemic may have automatically extended certain tax deadlines for a much longer period than the IRS originally allowed.
If those rulings ultimately survive appeal, taxpayers who paid certain penalties and interest charges during the affected period could potentially be entitled to refunds or reductions of those amounts.
Who Might Qualify for an IRS Penalty Refund?
The issue could affect both individuals and businesses.
Potentially affected taxpayers include those who paid:
- Failure-to-file penalties
- Failure-to-pay penalties
- Estimated tax penalties
- Certain accuracy-related penalties
- Interest charged on tax underpayments
- Certain payroll-related penalties
Not everyone who received a penalty will qualify, but the possibility is significant enough that many tax professionals are reviewing client records now.
Why Is July 10, 2026 Important?
One of the most important aspects of this issue is timing.
Many taxpayers may need to file what is known as a protective refund claim before July 10, 2026, in order to preserve their ability to seek refunds if the courts ultimately rule in favor of taxpayers.
Missing that deadline could mean losing the opportunity entirely.
Even if the legal questions take years to resolve, filing a protective claim may preserve your rights while the courts and the IRS determine the final outcome.
How Can You Determine Whether You Are Affected?
The first step is reviewing your IRS records.
Taxpayers should review account transcripts and other IRS notices for tax years that may have been impacted by penalties or interest assessed during the COVID disaster period.
Items worth reviewing include:
- IRS account transcripts
- Balance due notices
- Penalty notices
- Payment plan records
- Prior tax returns
- Business payroll filings
Many taxpayers simply do not remember exactly what penalties or interest they paid several years ago. Reviewing transcripts often reveals information that would otherwise be overlooked.
What Is a Protective Refund Claim?
A protective refund claim is a filing that preserves your ability to request a refund while a legal issue remains unresolved.
In this situation, the claim tells the IRS that you may be entitled to a refund depending on how the courts ultimately rule.
It does not necessarily mean the IRS immediately issues a refund.
Instead, it protects your place in line and helps prevent the statute of limitations from expiring before the legal questions are settled.
Should You File a Claim Yourself?
Like many IRS matters, the answer depends on your specific circumstances.
Some taxpayers may have relatively straightforward situations, while others may have multiple years, business entities, payroll filings, or significant penalty assessments that require a more detailed analysis.
The challenge is not simply filing paperwork. The challenge is determining whether a meaningful refund opportunity actually exists and making sure any filing properly protects your rights.
That's one reason many taxpayers choose to work with an Enrolled Agent. Enrolled Agents are federally licensed tax professionals who specialize in tax law, IRS representation, and resolving tax matters. As an Enrolled Agent, Ken Weinberg of Ken-Mar Tax can help review your IRS transcripts, identify potential refund opportunities, and ensure important deadlines are not missed.
Before filing a protective refund claim, it may be worthwhile to have a qualified tax professional evaluate your situation and determine whether the potential refund justifies the time and effort involved.
Don't Assume the IRS Will Contact You
If refunds ultimately become available, the IRS is unlikely to automatically identify every taxpayer who may qualify.
That's why tax professionals across the country are encouraging taxpayers to review their records now rather than waiting for future announcements.
The opportunity may not apply to everyone, but for taxpayers who paid significant penalties or interest, the potential benefit could be substantial.
How Ken-Mar Tax Can Help
Determining whether you may qualify for an IRS penalty refund requires a careful review of your tax history, IRS transcripts, and prior penalty assessments.
If you've paid IRS penalties or interest between 2020 and 2023, now is a good time to review your situation before important filing deadlines pass.
Ken-Mar Tax can help you evaluate whether a protective refund claim may be appropriate and guide you through the process of preserving your rights while these legal issues continue to develop.
Questions about IRS penalties, interest, or potential refund opportunities? Contact Ken-Mar Tax to schedule a review.
Small Business Tax Services
As an expert in small business tax services and tax consulting Ken-Mar Tax eats, sleeps and breathes small business tax strategies. Being an enrolled agent allows founder, Ken Weinberg, to represent you to the IRS - something only a CPA, tax attorney and Enrolled Agent can do. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. It also means he is continuously being updated on the new IRS tax codes and taking classes from the IRS that provide guidance on how to file returns so that they are not "flagged."
When you get your taxes prepared by Ken Mar Tax you also have the option to purchase the Tax Audit Protection Plan to avoid the extra costs of paying for audit representation. If you are audited by the IRS, State of Ohio or local taxing authorities, Ken-Mar Tax will meet with the taxing authorities on your behalf to negotiate a settlement for you. The fee covers all costs up to the Appeals level, including up to 15 hours of correspondence with the auditing party – either the IRS, State of Ohio or locality.
