Potential Abatement of Internal Revenue Service Penalties Following Judicial Ruling in Kwong v. U.S.

May 6, 2026, 17:38
USFinance

Introduction

A federal court ruling has established that certain taxpayers may be eligible for the refund or termination of penalties incurred during the COVID-19 pandemic.

Main Body

The current situation originates from the judicial determination in Kwong v. U.S., wherein the court concluded that emergency legislation pertaining to the COVID-19 pandemic extended filing deadlines. Consequently, the court ruled that the Internal Revenue Service (IRS) is liable for penalty repayments. Between January 20, 2020, and July 11, 2023, the IRS assessed over 120 million penalties against tens of millions of individuals for late filings, failure to pay, or deficient estimated tax payments. Institutional positioning regarding this ruling remains divergent. The Treasury Department, via Assistant Secretary Ken Kies, has asserted that the decision resulted from a misinterpretation of statutory language and has indicated an intent to maintain the defense of the original statute. Conversely, the national taxpayer advocate—an independent oversight body—has characterized the impact as widespread, noting that low-to-moderate income individuals are particularly susceptible to missing the claim window due to a lack of professional legal representation. To preserve their legal entitlements, eligible taxpayers must submit Form 843 via postal mail to the appropriate service center. Eligibility extends to those who filed late, paid penalties, or maintained outstanding penalty liabilities during the specified period, including those involving international information returns. Legal counsel has advised that the submission of these claims is a necessary precautionary measure regardless of the ongoing litigation status.

Conclusion

Eligible taxpayers must submit their claims for refund or abatement by the July 10 deadline to preserve their rights.

Learning

The Architecture of Legalistic Precision: Nominalization and Formal Distance

To bridge the gap from B2 to C2, a student must move beyond description and toward institutional abstraction. This text is a masterclass in Nominalization—the process of turning verbs or adjectives into nouns to create a sense of objective, timeless authority.

◈ The Anatomy of Abstraction

Observe how the text avoids human agency in favor of systemic events. A B2 learner might write: "The court decided that..." (Active/Simple). A C2 practitioner writes: "The current situation originates from the judicial determination..."

Comparison of Register:

  • B2 (Narrative): The Treasury Department thinks the court misunderstood the law.
  • C2 (Institutional): "The Treasury Department... has asserted that the decision resulted from a misinterpretation of statutory language."

By transforming the verb misinterpret into the noun misinterpretation, the author shifts the focus from the act of making a mistake to the concept of the error itself. This creates a "buffer of objectivity" essential for high-level academic and legal discourse.

◈ Lexical Sophistication: The 'Precise' Synonym

C2 mastery requires replacing common verbs with high-utility, low-frequency formal alternatives. Note the strategic deployment of these terms in the text:

Abatement →\rightarrow (instead of 'reduction' or 'removal') Divergent →\rightarrow (instead of 'different') Susceptible →\rightarrow (instead of 'likely to') Entitlements →\rightarrow (instead of 'rights')

◈ Syntactic Density

Notice the phrase: "...an independent oversight body—has characterized the impact as widespread."

The use of the appositive phrase (the information set off by dashes) allows the writer to define complex entities without interrupting the grammatical flow of the main clause. This enables the delivery of high-density information without sacrificing coherence—a hallmark of C2 writing.

Vocabulary Learning

abatement (n.)
A reduction or elimination of a tax, penalty, or other financial obligation.
Example:The court granted the taxpayer an abatement of the penalties imposed for late filing.
misinterpretation (n.)
An incorrect understanding or reading of a statement or text.
Example:The Treasury Department argued that the decision stemmed from a misinterpretation of the statutory language.
statutory (adj.)
Relating to or derived from a statute; established by law.
Example:The agency cited statutory provisions that allowed for penalty relief during the pandemic.
independent (adj.)
Not influenced or controlled by others; autonomous.
Example:The national taxpayer advocate is an independent oversight body.
precautionary (adj.)
Taken to prevent harm or a problem; protective.
Example:Submitting the claim is a precautionary measure to safeguard future rights.
litigation (n.)
The process of taking a dispute to a court of law.
Example:The taxpayer’s claim will remain pending amid ongoing litigation.
defense (n.)
A legal argument or set of arguments presented to protect a position.
Example:The Treasury’s intent is to maintain the defense of the original statute.
characterization (n.)
The act of describing or depicting something in a particular way.
Example:The agency’s characterization of the impact as widespread drew criticism.
susceptible (adj.)
Easily affected or harmed by something.
Example:Low‑to‑moderate income individuals are particularly susceptible to missing the claim window.
entitlement (n.)
The state of having a right to something.
Example:Eligible taxpayers have an entitlement to a refund if they meet the criteria.
submission (n.)
The act of presenting documents or information for consideration.
Example:The submission of Form 843 must be mailed to the appropriate center.
determination (n.)
A formal or official decision or conclusion.
Example:The court’s determination in Kwong v. U.S. established new filing deadlines.