If your clients carried federal tax debts through the pandemic, the interest deserves a second look. A pending Tax Court case asks whether Congress required the IRS to disregard Jan. 20, 2020, through July 10, 2023, when computing interest on affected liabilities. The question can matter even if the underlying tax debt arose before COVID, or the client paid the interest after the pandemic ended.
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The case is Wepplo v. Commissioner, Docket No. 36722-21. Michael and Tatyana Wepplo settled disputes involving their 2015, 2016 and 2017 tax years, paid the tax and related interest, and challenged the interest computation. Their claim rests on the mandatory disaster relief Congress added to section 7508A in 2019.
Tax Court Judge Mark V. Holmes recognized the broader stakes. In his July 2, 2026, order inviting amicus briefs, he observed that the question "appears to affect a potentially very large number of taxpayers and may be of some importance to the tax system." That language is reproduced in the Taxpayers Assistance Center Inc.'s filed brief.
Holmes was explaining why the court wanted additional briefing. He was not deciding who should win. Business groups, taxpayer advocates and low-income taxpayer clinics have since weighed in. The Chamber of Commerce's case page continues to identify Wepplo as pending.
The practical task is to determine whether the statute reaches a client's interest, which days might be excluded, and what procedure remains available. A strong substantive argument is of little use if the deadline for raising it has expired.
Why an old tax debt is part of the dispute
The relevant language is the 2019 version of section 7508A. Later amendments have different effective dates. The 2021 change applies to disasters declared after Nov. 15, 2021, and therefore does not control the 2020 COVID declarations. Practitioners should check the historical text before relying on the current Code.
Subsection (a) gave the IRS discretion to disregard a period of up to one year in determining whether specified tax acts were timely, the amount of interest and certain other charges, and the amount of a credit or refund. In 2019, Congress added subsection (d), requiring a period tied to a disaster's incident dates, ending 60 days after the latest specified incident date, to be disregarded in the same manner as a period under subsection (a).
The taxpayers' argument turns on that cross-reference. They contend it incorporates the separate rule for computing interest in paragraph (a)(2), without requiring the original payment deadline to fall within the disaster period. The government reads interest relief as tied to a qualifying deadline within that period. An already overdue liability would therefore continue accumulating interest.
The Chamber's amicus brief explains why the distinction matters. If the interest provision operates independently, the age of the underlying debt does not necessarily defeat relief. If it merely follows a postponed payment deadline, an old debt presents a different case.
Consider a client who owed additional 2017 income tax and still carried the balance in January 2020. Under the taxpayer interpretation, protected pandemic days would be excluded from the interest computation. Under the government's interpretation, the preexisting payment deadline prevents that relief. The tax remains due under either reading.
IRS has not conceded interest relief on old debts
Two earlier decisions explain the attention Wepplo has drawn. They also show why the duration question must be kept separate from the question of which interest qualifies.
In Abdo v. Commissioner, 162 T.C. 148 (2024), the Tax Court held that the 2019 provision supplied automatic, mandatory relief and treated a petition as timely. The court recognized at least 60 days of relief beginning Jan. 20, 2020, but expressly left the outer limit unresolved where a disaster declaration omitted an ending date or was extended.
In its Nov. 25, 2025, decision in Kwong v. United States, 179 Fed. Cl. 382 (2025), the Court of Federal Claims held that the mandatory period extended through July 10, 2023, including 60 days after the COVID incident period ended. That made the taxpayer's refund suit timely for certain older years under section 6532(a). The decision was mixed; other claims failed. It was not a ruling granting all taxpayers refunds of pandemic-period interest.
The government appealed Kwong in May 2026. Kwong's reasoning supports the longer period sought in Wepplo, but a Court of Federal Claims decision does not bind the Tax Court.
In Action on Decision 2026-01, the IRS acquiesced only to Abdo's holding that the COVID declarations created a mandatory postponement from Jan. 20 through March 20, 2020. It rejected the opinion's reasoning, partial invalidation of the regulations, and an interpretation permitting a longer mandatory period.
That limited acquiescence does not concede 60 days of interest relief on pre-COVID debts. The government separately disputes whether those debts qualify at all and asserts a one-year cap based on its reading of the statute and Treasury Regulation section 301.7508A-1(g)(3)(ii)(A). Taxpayers dispute that cap on the former mandatory provision. For an old liability, no relief remains a possible outcome. Estimates showing shorter and longer suspension periods must identify both as contingent scenarios.
Wepplo is not the only old-debt case. Venable reports that the government advanced its narrow deadline-based interpretation in Western Digital Corp. v. United States, No. 26-215, a Court of Federal Claims case involving more than $20 million in interest on a 2008 deficiency.
The Supreme Court's Loper Bright decision requires independent judicial judgment on statutory meaning. It gives taxpayers a framework for challenging the Treasury's interpretation, but does not resolve what Congress meant in this provision.
Count the right days and identify the actual payments
For an old debt, the claimed relief concerns interest attributable to protected days. It does not require moving the original payment deadline or erasing interest that accrued before the disaster.
Under section 6601, underpayment interest generally runs from the prescribed payment date until payment. Section 6622 generally requires daily compounding. A proper recomputation must account for rate changes, payments and credits, and any effect on subsequent compounding. Multiplying the current balance by a rough percentage will not establish the claim.
Payment timing is a separate inquiry. Interest attributable to 2020 might have been paid in 2025. The accrual period determines the potential substantive relief; the payment date can determine whether a refund claim remains timely.
Installment agreements make that distinction especially important. Under IRS procedures, payments generally apply to the user fee, then the oldest assessed tax, penalties on that assessment, and interest before moving to the next assessment. Paying 30% of an account balance does not mean the taxpayer paid 30% of the interest.
Review ordinary computation errors as well. An incorrectly applied payment or credit may support an adjustment independently of the COVID argument. That review should continue even if the broader statutory claim is uncertain.
A filing deadline can matter more than the next decision
July 10, 2026, received considerable attention as a deadline for many potential Kwong claims. It was never a universal expiration date. Recent payments can leave a claim open after that date.
Section 6511 generally allows a refund claim within three years after filing the return or two years after payment, whichever expires later. Claim timeliness and the lookback limit on the recoverable amount are separate hurdles. Assume a client paid the entire disputed balance, including interest, on Oct. 1, 2025, and no prior litigation forecloses the claim. The two-year payment rule could permit a claim through Oct. 1, 2027, covering eligible amounts paid within that window. A 2017 tax year does not, by itself, defeat the claim.
The December 2025 addition to section 7508A also matters. For claims filed after Dec. 26, 2025, the new refund-lookback provision treats a disregarded return-filing period as an extension for purposes of section 6511(b)(2)(A). Its application depends on establishing a qualifying postponement. It does not independently reopen every old tax year or eliminate the claim deadline.
The IRS has posted a Form 843 procedure for claims citing Kwong. Certain individuals with an IRS Online Account may submit electronically, limited to claims concerning fully paid interest and penalties. Businesses and individuals filing on paper should mail Form 843 to Internal Revenue Service, 1973 N. Rulon White Blvd., Ogden, UT 84201, with "Kwong vs. United States" across the top. Check the posted procedure before filing. Its availability does not mean the IRS accepts the legal argument.
Explain the section 7508A theory clearly. This claim concerns statutorily disregarded days, rather than the unreasonable IRS managerial or ministerial delay addressed by section 6404(e). Include taxpayer identification, tax periods, tax and return types, payment dates, supporting records and an available computation. Sign the claim.
Prepare a computation when feasible, but do not let a deadline expire while waiting for a final number. IRM 25.6.1.10.3.2.5 recognizes that a valid protective claim need not state a particular dollar amount. It must identify the affected years, explain the contingency, and clearly describe the claim's essential nature. Merely labeling a document "protective" does not make it sufficient.
Assess potential section 6676 exposure, including its reasonable-cause exception, rather than assuming disclosure alone prevents an excessive-refund-claim penalty.
For paper filings, use properly addressed USPS certified mail and retain the postmarked sender's receipt, delivery record and complete claim copy. Section 7502's rules require more than choosing any trackable service.
The public Kwong procedure covers fully paid amounts. For unpaid interest, determine what procedure is available in the client's examination, Appeals, collection or litigation posture. Do not assume a refund filing preserves that issue.
The forum has its own requirements
Under section 7422, a refund suit requires a duly filed administrative claim. Section 6532(a) generally requires waiting six months after filing unless the IRS decides the claim sooner. A suit ordinarily must follow within two years after the IRS mails a disallowance by certified or registered mail. Reconsideration does not restart that clock. Counsel must verify full-payment requirements, any applicable divisible-tax exception, and other jurisdictional restrictions before choosing a district court or the Court of Federal Claims.
A precedential Federal Circuit ruling in Kwong would control the Court of Federal Claims. Ordinary district-court tax refund appeals go to the regional circuits. The Federal Circuit's reasoning could influence the Tax Court without binding it. Those appellate paths matter when evaluating where to sue.
For qualifying post-decision Tax Court disputes, section 7481(c) and Rule 261 provide an interest-redetermination procedure. The motion generally must be filed within one year after the decision becomes final. The deficiency-payment route requires an assessment under section 6215 and payment of the entire deficiency plus the interest claimed by the IRS. Paying later does not restart the one-year period.
A prior Tax Court petition also requires review of section 6512. Its general refund restrictions have express exceptions, including amounts collected in excess of the amount computed in accordance with a final decision. Practitioners should not assume either that a separate refund suit is available or that every subsequent interest claim is confined to the Tax Court. The earlier decision, the relief requested and the statutory exceptions all matter.
I would begin with clients who recently paid substantial interest on old assessments and those with significant unresolved balances. Review the account records, identify the potentially affected interest, and calendar the deadline for the procedure actually available. Keep alternative computational grounds in the claim where supported. Explain the disputed law and document the advice.
Clients can preserve a potentially valuable position without being promised a refund. They also need to understand that pending litigation does not suspend their payment obligations. The next court decision may change the strength of the argument. It will not necessarily restore a filing opportunity that has already been lost.
