Penalty and Interest Abatements

After recent federal court rulings, Kwong v. United States, 179 Fed. Cl. 382 (2025), and Abdo v. Commissioner, 162 T.C. 148 (2024), we have now learned that many taxpayers and businesses paid IRS penalties and interest during the COVID-19 pandemic that they were never legally required to pay. Under I.R.C. § 7508A, Congress mandated that the disaster period (related to COVID-19) be disregarded when computing penalties, interest, and additions to tax — but the IRS continued assessing these charges anyway. The types of penalties potentially subject to refund include failure-to-file and failure-to-pay penalties, payroll tax deposit penalties, and estimated tax penalties, among others. For some taxpayers, the recoverable amount runs into six figures.

Recovering these amounts requires filing a Form 843 claim with the IRS before the July 10, 2026 deadline. The process involves obtaining your IRS account transcript, identifying every applicable penalty and interest charge, and submitting a properly documented claim package that supports the amount of penalty and interest in the claim. Carbone Law has the experience and analytical tools to evaluate your account quickly and file a claim on your behalf. If the IRS assessed interest and penalties on your tax balances during 2020 through 2023, we encourage you to contact us as soon as possible for a confidential consultation.

Carbone Law can analyze your transcript, compute the maximum abatement for your claim, and prepare a complete filing package on your behalf. Whether your penalties relate to payroll taxes, or individual income tax, the legal framework has made it possible for taxpayers to file claims related to penalties and interest. Click here to schedule an intake call.

Please note that eligibility is fact-specific, and the IRS decides whether any abatement or refund is granted. This blog post is informational only and does not guarantee an outcome.