KPMG tax teams eye refund claims after pandemic deadline rulings

KPMG tax controversy teams may have a narrow, fast-closing path to refund work as pandemic deadline rulings open claims that many taxpayers never knew existed. The biggest clock is July 10, 2026, the date the Taxpayer Advocate Service said most refund claims for COVID-19 period penalties and interest must be filed.

The issue turned on Section 7508A, the disaster-relief statute that postponed deadlines for affected taxpayers. At the ABA May Tax Meeting on May 8, experts discussed how two cases, Abdo and Kwong, pushed that relief far beyond the short extensions the IRS had treated as controlling. The Taxpayer Advocate Service said tens of millions of taxpayers may be entitled to refunds or abatements, but relief will not happen automatically. The agency warned that outcomes may favor the well advised over the unaware.

Abdo laid the groundwork. In its April 2, 2024 TaxNewsFlash, KPMG said the Tax Court held that the taxpayers were automatically entitled to an extension to file a petition under Section 7508A(d), invalidating regulations to the extent they tried to narrow the mandatory 60-day postponement period. In that case, Abdo & Farah v. Commissioner, the taxpayers mailed their petition on March 17, 2020, after a notice of deficiency had set March 2, 2020 as the last day to petition. The Ohio major disaster declaration came later, on March 31, 2020, and KPMG described the opinion as a case of first impression on the mandatory extension period.

Kwong widened the field again. Grant Thornton said the Court of Federal Claims interpreted the mandatory disaster-relief postponement provision to run from January 20, 2020 through July 10, 2023, rejecting the IRS’s effort to confine relief to shorter notice-based pandemic extensions, including the April 15, 2020 filing and payment date pushed to July 15, 2020. Fox Rothschild said Kwong built on Abdo and reinforced the view that Section 7508A’s postponements were mandatory and self-executing.

For KPMG employees, the practical work is not abstract. Firms will need to inventory open and closed matters, review statute-of-limitations dates under Section 6511, and pull penalty and interest histories now. Grant Thornton flagged likely exposure in failure-to-file, failure-to-pay, estimated tax penalties under Sections 6654 and 6655, and information-return penalties such as Forms 5471 and 5472. Fox Rothschild said taxpayers who paid pandemic-era interest or penalties generally have two years from the payment date to seek a refund, which makes client triage urgent. The compliance tail from COVID-19 is still producing real money in 2026, and the first firms to spot the right cases may be the ones that salvage the claims.