Chapter 2 – Could This Actually Affect You?

If you have made it this far, you may be asking yourself a simple question:

“This is interesting, but does any of it actually apply to me?”

That is exactly the question you should be asking.

Not every person who reads about Kwong will ultimately benefit from it.

Not every penalty assessed during the COVID-19 period will be refundable.

Not every unfiled return will generate a refund.

Not every amended return will produce a tax benefit.

And not every taxpayer will need to take action before July 10, 2026.

One of the reasons the National Taxpayer Advocate has devoted so much attention to the Kwong decision is that the potential implications reach across an extraordinarily broad group of taxpayers.

The discussion is not limited to one income level.

It is not limited to one profession.

It is not limited to one type of return.

In fact, you may already have encountered one of the situations that brought Kwong into the national conversation without realizing it.

Before thinking about legal theories, court opinions, or procedural rules, take a moment to think about your own experience between 2020 and 2023.

What was happening in your life?

What was happening in your business?

What happened with your tax filings?

The answers to those questions often provide the most useful starting point.

You May Have Filed Late and Never Thought About It Again

Let’s start with one of the most straightforward situations.

Perhaps you filed a return after its original due date.

At the time, there may have been a perfectly reasonable explanation.

You may have been dealing with family obligations.

You may have experienced a business disruption.

You may have been waiting for missing information.

You may have changed accountants.

You may have moved.

Or perhaps you simply ran out of time.

Whatever the reason, the return was eventually filed.

Months later, an IRS notice arrived.

You may have glanced at it, noticed a penalty, and paid the amount without much thought.

The issue seemed resolved.

The file was closed.

Life moved on.

Today, however, you may not remember the details.

You may not remember the amount of the penalty.

You may not remember whether interest was included.

You may not remember exactly when the assessment occurred.

And that is perfectly understandable.

Several years have passed.

The important point is not whether you remember every detail.

The important point is whether the filing occurred during the period now being examined through the lens of Kwong.

If it did, that situation may deserve a closer look.

Not because a refund is guaranteed.

Not because the IRS has agreed with the court’s reasoning.

But because the timing of the filing may now matter in ways that few people considered at the time.

You May Have Paid Late Because Cash Flow Was Tight

For many people, filing the return was not the challenge.

Paying the balance was.

Think back to the uncertainty of the pandemic years.

Revenue declined for many businesses.

Employment situations changed.

Investments became volatile.

Cash flow planning became more difficult.

You may have filed your return on time but lacked the liquidity needed to pay the balance immediately.

Or perhaps you made partial payments and planned to catch up later.

If that happened, you may have received failure-to-pay penalties, interest charges, or both.

At the time, you may have accepted those amounts as a normal consequence of paying late.

And perhaps they were.

But one of the questions raised by Kwong is whether some of those assessments were calculated using deadlines that may ultimately be viewed differently.

Again, this does not mean every payment-related penalty is refundable.

It means the facts deserve attention before assumptions become conclusions.

You May Have Received a Notice and Paid It Without Question

This may be one of the most common situations of all.

An IRS notice arrives.

The amount is not enormous.

You are busy.

The explanation appears technical.

You pay the balance and move on.

For many people, that is a rational decision.

The time and emotional energy required to challenge a relatively modest assessment often exceeds the amount at stake.

Years later, however, circumstances can change.

A legal development may cause practitioners to revisit assumptions that once appeared settled.

That is precisely what has happened with Kwong.

If you paid a penalty or interest assessment during the COVID-19 disaster period, you may want to understand exactly what was assessed, why it was assessed, and when it was assessed.

You do not need to reach a conclusion immediately.

You simply need to know the facts.

You May Have Never Filed Because You Thought There Was No Refund

This category deserves special attention.

Not because it involves the largest dollar amounts.

But because many people never realize they belong in it.

Perhaps you worked only part of the year.

Perhaps federal income tax was withheld from your paycheck.

Perhaps your income was lower than expected.

Perhaps you changed jobs several times.

Perhaps you left the United States.

Perhaps you believed that any potential refund would be relatively small.

At the time, filing may not have seemed urgent.

You may have told yourself you would file later.

Then later became next month.

Next month became next year.

Eventually, several years passed.

At some point, you may have assumed the opportunity was gone.

That assumption is exactly why the Taxpayer Advocate’s recent discussions have attracted so much attention.

One of the broader questions emerging from Kwong is whether some taxpayers who believed their refund opportunities had expired may still have rights worth evaluating.

No one can promise that a refund remains available.

No one can promise that courts will ultimately adopt the broadest interpretation of the case.

But if you have unfiled returns from 2019 through 2022, dismissing the issue without investigation may be premature.

You May Have Filed the Return but Missed Something

Not every situation involves a late return.

Sometimes the return was filed on time.

The issue is what happened after it was filed.

Perhaps you later discovered that withholding was omitted.

Perhaps a credit was overlooked.

Perhaps you misunderstood eligibility rules.

Perhaps a deduction was missed.

Perhaps information arrived after the return was filed.

At first, amending the return seemed unnecessary.

Later, you considered revisiting the issue.

Eventually, you assumed it was too late.

That assumption may deserve reconsideration.

One of the recurring themes throughout the Kwong discussion is that timing matters.

And because timing matters, understanding which deadlines apply to your specific situation becomes critically important.

If You Own a Business, Your Story May Be More Complicated

Business owners often assume tax controversies affect only large corporations.

In reality, many of the situations receiving attention today involve businesses that experienced extraordinary operational challenges during the pandemic.

Think back to what your business may have faced.

You may have dealt with staffing shortages.

You may have struggled to obtain inventory.

You may have adapted to remote work arrangements.

You may have implemented new payroll systems.

You may have managed cash flow on a week-by-week basis.

You may have been trying to understand multiple relief programs simultaneously.

Under those circumstances, tax compliance sometimes became reactive rather than proactive.

Returns may have been delayed.

Deposits may have been postponed.

Notices may have accumulated.

Penalties may have been assessed.

The question today is not whether those circumstances excuse every compliance issue.

The question is whether the assessments connected to those issues deserve review in light of the legal questions raised by Kwong.

For some businesses, the answer may ultimately be no.

For others, the answer may be worth exploring.

If You Have International Filing Obligations, Do Not Assume This Is Irrelevant

One of the most overlooked aspects of the Taxpayer Advocate’s analysis involves international information returns.

You may not owe additional income tax.

You may have reported all of your income correctly.

Yet you may still have encountered substantial penalties because a required international form was filed late.

If you have foreign bank accounts, foreign investments, ownership interests in foreign entities, or other international reporting obligations, you already know how complicated these rules can be.

The penalties associated with international reporting often surprise people because they can arise even when no tax is due.

For that reason, taxpayers with international filing obligations should be especially cautious about assuming the Kwong discussion is unrelated to their circumstances.

The potential implications may extend beyond traditional income tax filings.

You May Be Asking the Wrong Question

As you read about Kwong, it is natural to ask:

“Am I entitled to a refund?”

The problem is that this question often comes too early.

Before determining whether a refund exists, you first need to answer several simpler questions.

What happened?

When did it happen?

What was assessed?

What was paid?

What years are involved?

What deadlines apply?

Only after understanding those facts can you begin evaluating whether any rights may still exist.

This is one reason transcript reviews have become such an important part of the conversation.

The facts matter.

And after several years, your IRS account often remembers details that you no longer do.

The People Most Likely to Miss an Opportunity

Ironically, the people most likely to miss a potential opportunity are often not those with the most complicated situations.

They are the people who assume they have no opportunity at all.

The business owner who paid a notice without reading it closely.

The retiree who assumed a refund was lost years ago.

The employee who never filed because withholding exceeded the tax ultimately owed.

The expatriate who struggled to understand international reporting requirements.

The family that simply had more pressing concerns during the pandemic years.

If there is a common thread connecting these situations, it is not tax complexity.

It is human nature.

Most people stop investigating once they believe the answer is already known.

The purpose of this guide is not to suggest that the answer is different.

The purpose is to encourage you to verify that assumption before important deadlines pass.

The Most Important Takeaway from This Chapter

At this stage, you do not need to determine whether you have a claim.

You do not need to decide whether to file anything.

You do not need to predict how the Federal Circuit will rule.

You simply need to determine whether your situation deserves further review.

That may sound like a modest objective.

In reality, it is one of the most important decisions in this entire process.

Because before you can evaluate a refund, a protective claim, an abatement request, or any other procedural option, you first need a clear understanding of your own facts.

And that understanding begins with a document that many people have never reviewed carefully:

your IRS tax account transcript.

That is where we turn next.