Failure-to-deposit and late-filing penalties on payroll and business returns during the pandemic may be recoverable too.
When people talk about COVID-era IRS relief, the conversation almost always lands on individual income tax. That focus is understandable, but it is also incomplete. The same reasoning that drives the Abdo and Kwong rulings does not stop at the personal return. It reaches business and employment taxes as well, and for many companies that is where the larger numbers were sitting all along. Payroll-tax penalties assessed from 2020 through 2022 were frequently substantial, and they often piled up quietly across multiple quarters while owners were focused on simply keeping the doors open.
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The practical takeaway is straightforward. If your business was charged penalties or interest tied to deadlines that fell during the COVID period, there may be a claim worth pursuing. The opportunity is easy to overlook precisely because business and employment tax accounts are handled separately from individual ones, and because the penalties involved are the kind that owners tend to pay and move past rather than question. A closer look at those accounts is often where recoverable dollars turn up.
Which businesses and returns may be affected
The window in play is broad. Across roughly the 2019 through 2022 tax years, the analysis can reach a wide range of filings, which is part of why so many businesses qualify for a review without realizing it. The relevant categories include:
- Corporate and pass-through income tax returns. This covers Forms 1120, 1120-S, and 1065, meaning C corporations, S corporations, and partnerships are all potentially in scope.
- Employment tax returns. Form 941, the quarterly payroll return, and Form 940, the federal unemployment return (FUTA). Because employment tax is filed on a quarterly rhythm, a single year can carry several separate exposure points.
- Any business income, employment, or excise liability with a filing or payment deadline that overlapped January 20, 2020 through July 10, 2023.
That last category is worth reading twice. The qualifying factor is the timing of the deadline, not the type of tax in the abstract, which is why the reach is wider than many owners assume.
The penalties most worth a second look
Not every line on an IRS transcript is equally promising, but a few categories stand out as the ones most worth reviewing closely.
Failure-to-deposit penalties
These hit employers who were late depositing withheld payroll taxes during the pandemic. They can be steep, and they add up fast across multiple quarters. That combination of a high rate and repeated quarterly exposure makes them a prime target for review, and often the single largest recoverable item on a business account.
Failure-to-file penalties
These apply to business returns that were filed late during the COVID period. Late filing was common in those years for understandable reasons, and the resulting penalties are exactly the type this analysis is built to examine.
Underpayment interest
This accrues on balances tied to due dates within the period. On a long-overdue account, interest is frequently the larger number of the two, quietly compounding while the underlying balance sits unresolved.
Refund or abatement: which applies to your business
Once a potentially recoverable amount is identified, the right procedure depends on a single question: has the money already been paid? The answer determines the path.
If your business already paid the penalties or interest, the route is generally a refund claim on Form 843. If the amounts are still unpaid, you can request abatement instead. And if the IRS is actively collecting, the issue can sometimes be raised in a Collection Due Process hearing. These are not mutually exclusive in practice. Many businesses have a mix of both, with some amounts already paid and others still outstanding, which means more than one filing may be appropriate to capture the full picture across every account and period.
What to pull together
A clean, well-documented file is what separates a vague suspicion from a claim that can actually be filed. For a business account, that groundwork typically involves three things:
- Business IRS account transcripts for each entity and each affected period. It is important to remember that income tax and employment tax are tracked as separate accounts, so a single company can have several transcripts in play at once.
- A timeline of deposit dates, return filing dates, and penalty and interest assessments for 2020 through 2022.
- Notes on which amounts were paid versus still owed, since that distinction drives which procedure applies to each item.
A note on employment-tax accounts
Employment-tax accounts in particular can be dense, with separate entries for each quarter. That complexity is exactly why a careful review matters. Reconstructing these accounts cleanly, entry by entry and quarter by quarter, is what turns a hunch into a filed claim.
Same deadline applies. Businesses face the same protective-claim timing as individuals. Practitioners treat July 10, 2026 as a critical date. For a multi-year payroll account, the dollars at stake can be meaningful enough that a timely review pays for itself, which is a strong reason not to let the date slip by unexamined.
How AnidjarLaw Can Help
Our office is led by Michael A. Anidjar, Esq., an attorney who is also a CPA and holds an LL.M. in Taxation. That combination matters here, because evaluating these claims sits squarely at the intersection of tax accounting and tax law.
We can pull and review your IRS account transcripts, identify the amounts tied to the COVID-19 period, estimate your potential recovery, and prepare and file a protective refund or abatement claim before the July 10, 2026 deadline. If the IRS denies or limits a claim, we can advise on protest, Appeals, or litigation.
Contact AnidjarLaw to evaluate whether this applies to you. Because the deadline is approaching, we recommend starting the review promptly.
Is Your Business Owed a Refund?
The July 10, 2026 deadline is approaching. Let our experienced tax attorneys review your IRS accounts and identify recoverable COVID-era penalties before time runs out.
CONTACT US NOWDisclaimer: This article is provided for general informational purposes only and is not legal or tax advice. The law in this area is developing and the IRS may contest or appeal these claims; outcomes depend on each taxpayer's specific facts. Reading this article does not create an attorney-client relationship. AnidjarLaw is a South Florida firm based in Hollywood, Broward County. Consult a qualified tax professional about your situation. Attorney advertising.
