A recent court ruling could unlock major refunds for taxpayers – but the clock is ticking. In this episode, Eric Green sits down with Kenny Dettman to break down the massive implications of the Kwong and Abdo decisions, as well as why they could mean widespread penalty and interest abatements tied to the COVID-era IRS shutdown period.
At the center of it all? The IRS’s handling of IRC §7508A during the federally declared disaster window from 2020 through mid-2023. According to recent rulings, deadlines may have been suspended, potentially invalidating penalties and interest assessed during that time. But here’s the catch: the deadline to act is July 11, 2026. They also discuss scalable solutions, including new tools designed to automate transcript retrieval, calculations, and filings, giving both taxpayers and practitioners a way to act before time runs out.
Whether you’re a tax professional or a taxpayer, this is one of those “don’t miss it” moments. Because come July 12… the opportunity may be gone for good. Tune in now and make sure you’re not the one saying, “Why didn’t I know about this?”
Check out Penalty Back and see what you can recover here: https://trn.penaltyback.com/
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IRS Penalties Reversed? With Kenny Dettman
The recent Kwong and Abdo court decisions may have quietly opened the door for taxpayers to recover significant IRS penalties and interest assessed during the COVID emergency period — but the window to act is closing fast.
In a recent discussion, tax professionals Eric Green and Kenny Dettman broke down why these cases could become one of the biggest IRS penalty abatement opportunities in years.
At the center of the issue is Internal Revenue Code Section 7508A, which allows the IRS to postpone certain filing and payment deadlines during federally declared disasters. According to the courts in Kwong v. United States and Abdo, the IRS failed to properly apply those rules during the COVID emergency period that ran from January 2020 through May 11, 2023, plus an additional 60 days afterward.
The implication is enormous: penalties and interest that accrued during that timeframe may not have been legally due at all.
This includes failure-to-file penalties, failure-to-pay penalties, estimated tax penalties, payroll tax penalties, information return penalties, and associated interest. Whether the balances were paid or remain outstanding, taxpayers may be eligible to request abatements or refunds.
The legal backdrop stems from the Supreme Court’s Loper Bright decision, which overturned the longstanding “Chevron deference” doctrine. Under Chevron, courts often deferred to federal agency interpretations of statutes. Loper Bright changed that by instructing courts to independently interpret the law rather than automatically accepting agency guidance.
That shift paved the way for the Abdo and Kwong rulings, where courts concluded that statutory deadline suspensions during the COVID disaster period applied more broadly than the IRS had acknowledged.
However, there is a major catch: taxpayers must act quickly.
According to Dettman, refund claims generally need to be filed by July 11, 2026, or the opportunity could disappear entirely. Even though the government may still appeal the Kwong decision, waiting could mean losing the right to file altogether.
For tax professionals, the challenge is both technical and logistical. The key to evaluating eligibility is obtaining IRS transcripts, which provide the most accurate record of penalties and interest assessments. But obtaining transcripts has become increasingly difficult due to IRS processing delays for Forms 8821 and 2848.
The actual calculations can also become complicated. Some penalties and interest periods straddle the COVID disaster timeframe, and each tax type and tax period generally requires its own Form 843 refund claim. For practitioners handling clients with multiple years of payroll and income tax issues, the paperwork can quickly become overwhelming.
To address this, Dettman’s company developed tools through TaxNow and Penalty Back to help automate transcript retrieval, analyze penalty exposure, calculate potential refunds, and even prepare Forms 843. Other tax resolution software providers, including Tax Help Software and PitBull, are also building Kwong-related solutions.
Beyond the refund opportunity itself, Green emphasized another important issue for tax professionals: client communication.
Even if a taxpayer ultimately does not qualify, professionals should still alert clients to the possibility. Failing to mention a widely discussed opportunity could create reputational risk if clients later hear about it elsewhere.
As Green noted, perception matters. Clients want to know their tax professional is staying ahead of important developments — especially when those developments could potentially save them thousands of dollars.
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About Kenneth Dettman
Kenny Dettman is the Co-Founder and CEO of TaxNow, a tax technology platform transforming how both taxpayers and firms monitor IRS activity and deliver proactive client service. A CPA with nearly 20 years of experience, Kenny has built and scaled multiple tax and compliance businesses, including FileForms and Sagemont Advisors. He previously served as a Tax Partner and at Alvarez & Marsal, where he led global tax operations and the firm’s COVID-19 stimulus response team.
