PitBullTax News

File Protective Kwong Claims Before July 10, 2026 — Or Your Clients May Permanently Lose Their Rights

The tax resolution industry may be witnessing one of the largest penalty and interest recovery opportunities in modern IRS history.

Recent developments surrounding Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025), together with warnings issued by the National Taxpayer Advocate, suggest that millions of taxpayers may have been improperly assessed penalties and related interest during the COVID-19 federal disaster relief period.

Most taxpayers have no idea this opportunity exists.

Many practitioners still do not fully understand the urgency.

But the statute clock is already ticking.

The National Taxpayer Advocate publicly warned that taxpayers who fail to timely file protective refund claims before July 10, 2026 may permanently lose their rights to recover these amounts.

For some taxpayers, this could mean losing thousands — or even tens of thousands — of dollars forever.

THIS IS NOT AUTOMATIC IRS RELIEF

One of the most dangerous misconceptions circulating right now is the belief that the IRS will automatically adjust accounts if the Kwong litigation becomes final.

That is NOT what the National Taxpayer Advocate is saying.

Taxpayers generally must affirmatively file a protective claim using Form 843 in order to preserve their rights while litigation, IRS guidance, and administrative interpretation continue evolving.

Waiting for the IRS to “figure it out later” could become a catastrophic mistake.

Why Kwong Matters

Under IRC §7508A, the IRS postponed numerous tax deadlines during the federally declared COVID-19 disaster period.

The Kwong decision raises substantial questions regarding whether certain penalties and related interest should have continued accruing during those postponement periods.

According to the Taxpayer Advocate Service, the IRS assessed more than 120 million penalties during the COVID-era relief window.

Many of those assessments may now be challengeable.

Potentially Affected Penalties

Based on current interpretations of Kwong and IRC §7508A, potentially affected penalties and interest may include:

• Failure to File penalties
• Failure to Pay penalties
• Estimated Tax penalties
• Related statutory interest
• International Information Return penalties, including:
  • Form 5471
  • Form 3520
  • Form 8865
  • Form 8938

IMPORTANT:
Only penalties and related interest assessed between January 20, 2020 and July 10, 2023 fall within the primary COVID disaster postponement period relevant to Kwong-related claims.

PitBullTax Software Automatically Identifies Kwong Opportunities

To help practitioners quickly identify potentially qualifying clients, PitBullTax Software now includes a dedicated:

“Kwong Opportunities” Section inside the IRS Transcripts Dashboard.

This feature was specifically designed to help firms identify:

• Penalties assessed during the COVID disaster period
• Potential refund opportunities
• Significant interest accruals
• Clients with substantial penalty exposure
• High-value protective claim opportunities

For many firms, this may uncover opportunities hidden across hundreds or even thousands of clients.

Why the Kwong Opportunities Section May Initially Appear Empty

Many users contact us asking:

“Why is my Kwong Opportunities section blank?”

The answer is simple.

Your clients’ transcripts must first be refreshed so the software can analyze IRS assessment data against the COVID disaster period criteria.

To Populate the Kwong Opportunities Section:

Step 1: Open the Transcripts Dashboard

Step 2: Under IRS Tax Liability, click: “Update All” button

Step 3: Connect to IRS e-Services when prompted

PitBullTax Software will automatically:

• repull transcripts,
• analyze assessment dates,
• identify potentially qualifying penalties,
• and populate the Kwong Opportunities section.

IMPORTANT:
If transcripts for a client were already pulled after April 12, 2026, this step may not be necessary because that is when the Kwong analysis feature was introduced.

Why Protective Claims Should Be Filed NOW

Even if future litigation modifies, limits, or expands aspects of the Kwong decision, taxpayers who timely file protective claims may preserve their rights while the legal process continues.

Taxpayers who do nothing may lose those rights permanently.

That is exactly why the National Taxpayer Advocate publicly encouraged taxpayers and practitioners to file protective claims BEFORE July 10, 2026.

A properly prepared protective claim:

• preserves the statute of limitations,
• protects refund rights,
• allows future supplementation,
• and keeps the taxpayer’s position alive while legal developments continue unfolding.

How to Submit Form 843 Protective Claims

STEP 1 — Identify Potentially Qualifying Penalties

Use:

• the Kwong Opportunities section,
• IRS Account Transcripts,
• and penalty/interest assessment dates falling between January 20, 2020 and July 10, 2023.

STEP 2 — Prepare Form 843

Form 843 should generally include:

• applicable tax year,
• type of tax,
• penalty type,
• amount requested (or protective language),
• detailed explanation statement.

Sample Explanation Statement

Taxpayer(s) hereby submit(s) this protective claim for refund and request for abatement pursuant to IRC §7508A, Internal Revenue Manual provisions regarding protective claims, and the holding in Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025)

During the COVID-19 federal disaster period, the IRS postponed certain tax deadlines under IRC §7508A. Taxpayer(s) believe(s) that penalties and related interest assessed during the period beginning January 20, 2020 through July 10, 2023 may have been improperly assessed or calculated.

This claim is filed to preserve taxpayer rights pending final resolution of litigation, administrative guidance, and/or further interpretation of IRC §7508A as applied to penalties and interest.

Taxpayer requests refund and/or abatement of all applicable penalties and related interest associated with the above-referenced tax period, including but not limited to Failure to File penalties, Failure to Pay penalties, Estimated Tax penalties, and associated interest accruals.

The exact amount of relief may require additional IRS computation and transcript review. Taxpayer reserves the right to supplement this claim with additional facts, legal authorities, computations, and supporting documentation.

STEP 3 — Clearly Mark the Claim as Protective

Using the “Show Heading” feature inside PitBullTax Software, add the following phrase to the top margin of Form 843:

“Protective Refund/Abatement Claim Pursuant to Kwong v. United States”

STEP 4 — Properly Sign Form 843

Some attorneys are recommending:

• taxpayers personally sign the Form 843,
• signatures and dates be completed in blue ink,
• and practitioners retain complete copies for their records.

STEP 5 — Attach Supporting Documentation

Recommended attachments to Form 843 include:

• IRS Account Transcripts
• Highlighted penalty and interest assessment transactions
• Form 2848 covering the applicable periods

STEP 6 — MAIL CLAIMS BEFORE JULY 10, 2026

Form 843 protective claims currently must be paper-filed.

We strongly recommend:

• Certified Mail
• Return Receipt Requested
• Retaining complete copies of all submissions

IMPORTANT:
If multiple tax years or periods are involved, a separate Form 843 should generally be prepared for each period.

PitBullTax Software allows you to use the Copy function to duplicate previously prepared Form 843 claims and dramatically reduce data entry time.

This May Become One of the Biggest Revenue Opportunities in Tax Resolution

Many practitioners are still focused only on existing balances due.

But Kwong opens an entirely different category of representation work:

• reviewing historical penalties,
• recovering previously paid amounts,
• reducing current liabilities,
• filing protective claims,
• generating new client engagements,
• and creating substantial additional firm revenue.

Most taxpayers will never discover this opportunity on their own.

They are relying on YOU to identify it before the deadline expires.

FINAL WARNING — JULY 10, 2026

Once July 10, 2026 passes, many taxpayers may permanently lose the right to pursue these claims.

Do not wait until the last minute.

Open your Transcripts Dashboard.
Click “Update All.”
Review your Kwong Opportunities.
Begin preparing protective Form 843 claims NOW.

If you have any questions regarding this subject, please contact our representatives at 954-748-2855.