The headlines scream: “Millions may be owed a COVID tax refund.” The reality is much less exciting. You may be entitled to a refund, but it will be for certain penalties assessed for tax returns filed during the pandemic.
“This is a situation where a technical tax ruling could have a real impact for taxpayers, but it’s not as simple as ‘the IRS owes everyone money,'” Dave Bohrman, co-founder and vice president of marketing at Tax Guard, told Yahoo Finance.
Here are the details.
A recent court decision clarified tax deadlines in place during disasters, such as the COVID-19 pandemic. The ruling addressed the IRS’s suspension of certain federal tax deadlines from January 20, 2020 to July 10, 2023.
The November 2025 court ruling said taxpayers can claim refunds for penalties imposed for filing and/or paying late, for paying less than the amount due on a return, and for other penalties and interest.
“Although the case was decided several months ago, it has recently begun to attract more attention as tax professionals recognize its potential scope and the approaching deadlines for filing refund claims,” Ivan H. Golden, a partner at the Chicago-based law firm Taft, recently wrote in an analysis of the decision.
To know if you will benefit from the court ruling, you will need to do some research into your tax filing history.
“The timing depends on whether someone actually had sanctions imposed during the COVID period, and that’s where it gets complicated,” Bohrman said. “It requires people to go back, review what they were charged with and, in some cases, take steps to preserve their eligibility.”
“The amount of potential refunds could be significant for taxpayers who resolved audits or paid substantial tax liabilities during the pandemic years,” Golden wrote.
He also noted that there is an important time element to consider: Potential statutes of limitations for pandemic-era claims may begin to expire in 2026.
However, there is a lot of uncertainty surrounding the case.
Bohrman said the IRS is expected to challenge the ruling, so many advisers are recommending protective claims while the legal process plays out.
“The biggest risk is that taxpayers who might qualify simply never check. With a defined deadline, it becomes a matter of awareness and follow-through,” he added.
If you believe you may be owed a significant refund under the parameters of the court decision, you should consult with a tax professional to determine your next steps.