Tax Court urged to suspend interest on tax not paid during pandemic

September 14, 2026

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The main reason to comply with any tax filing on time is that generally it is the taxpayers’ legal requirement. When filers don’t meet that obligation and owe tax, another reason to file kicks in: penalty and interest charges.

The U.S. Tax Court currently is considering the suit brought by Michael and Tatyana Wepplo against the IRS in which they are seeking relief from penalties they argue were improperly assessed during the COVID 19 pandemic disaster period. That time frame was.

The Wepplos’ attorneys contend that interest for that period, which ran from Jan. 20, 2020, through July 10, 2023, should not have been included on the settlement the couple reached with the IRS in May 2025 to pay 2015, 2016 and 2017 tax year liabilities and associated interest.

But then, the couple took advantage of their legal right to file for a redetermination of the interest charges.

They contend that the mandatory COVID-19 disaster relief provision (Internal Revenue Code § 7508A(d) enacted on Dec. 20, 2019) should have automatically suspended — or technically per the legislative language, disregarded — the accrual of tax underpayment interest, even on taxes that were due before the pandemic.

Obviously, there are lots of other taxpayers with older tax debt who could be affected by the eventual ruling. That possibility did not escape Tax Court Judge Mark V. Holmes, who noted in a July 2 order that “The question is one that appears to affect a potentially very large number of taxpayers and may be of some importance to the tax system.”

So it was not surprising that when Holmes’ order also invited third parties to submit amicus briefs on the case without being restricted to the usual page limit rule, plenty of them accepted.

Law firms and business and taxpayer advocacy groups sent the Court their thoughts by the Aug. 28 deadline on why they agree that interest on pre-pandemic tax debts was automatically suspended during the coronavirus disaster period.

Friendly filings: An amicus filing, officially an amicus curiae or “friend of the court” brief, is a long-standing way for those who are nor party to a lawsuit to provide information, expertise, or arguments they believe will help the court reach a proper decision.

Below are some of those who filed their supporting legal arguments in the Wepplo v. Commissioner case. The links will take you to the filings or synopses of their stances.

U.S. Chamber of Commerce, urging the Tax Court to ensure that disaster-relief provisions in the Tax Code are administered according to their terms and applied uniformly to affected taxpayers.
National Taxpayers Union Foundation’s amicus brief was filed through McDermott Will & Schulte, and contends, in part, that Congress prescribed a mandatory, self-executing relief period … and that Treasury’s general rulemaking authority or discretionary authority under … cannot be used to narrow relief Congress itself provided by statute.
Kostelanetz LLP’s brief on behalf of the Center for Taxpayer Rights (CTR) in argued that “Taxpayers owing pre-disaster liabilities are no less affected by or deserving of relief from federally declared disasters and fall within the remedial purpose intended by Congress.”

Impact on lower-income taxpayers: The Kostelanetz amicus brief noted that the eventual Tax Court’s decision is particularly important to low-income taxpayers.

The law firm argued that “the pandemic made it more difficult for low-income taxpayers to fulfill their payment obligations” and “they are least equipped to pursue … relief as a result of the nationwide COVID-19 disaster.”

“As a practical matter, the Tax Court is the only judicial venue available to low-income taxpayers and its decisions have national reach,” wrote Kostelanetz attorneys.

That same argument was made in the amicus brief of the Taxpayers Assistance Center, filed by Dentons Sirote PC attorneys at two of the firm’s Alabama offices. “TAC files this brief in support of neither party,” but because “the Court’s answer will govern a large class of taxpayers who are not before it and who lack the means to get here.”

TAC’s interest, the filing added, “is in ensuring that the Court decides the question with full awareness of the size and circumstances of the affected class, and that the resulting opinion states a rule that the [Internal Revenue] Service can administer uniformly and that low-income, as well as sophisticated taxpayers can understand and apply.”

Other filings detailing the potential effects on lower-income taxpayers and in support of the Wepplos’ case include, with thanks to Kim Tyson’s post at Tyson on Taxes, the blog for her North Carolina-based K. Tyson Law firm —

You also can read more about Wepplo v. Commissioner in Ed Zollars’ Current Federal Tax Developments post.

5 things to know about IRS interest charges: If you aren’t facing interest charges on unpaid taxes during the coronavirus pandemic, I thank and applaud you for reading this far.

To repay your tax geekiness, here are five IRS interest items to note just in case you one day get a notice from Uncle Sam’s tax collector telling you that you owe.

1. Interest is charged from the due date of the return, regardless of when the balance was assessed. In most cases, that’s the original due date of a tax return, not when a tax balance is assessed. For returns due on April 15, that’s the interest triggering date, even if you filed earlier. And if you filed your return late and owed, interest is computed from the April 15 deadline by which tax should have been paid.

2. Interest is compounded daily. Yes. The charge is tallied every single day. And by definition, compounded interest means that the amount is calculated based on both the principal (the tax and the assessed penalties) and the previously accrued interest. Yes again. Interest is assessed on interest.

This is why in some tax cases the interest charges end up being more than the original unpaid tax amount. The only way to stop the compounding is to pay what you owe.

3. IRS interest rates are adjusted quarterly. This federal law calls for interest, for all tax cases other than corporations, to be computed based on the federal short-term rate plus 3 percentage points. The interest rate for individual taxpayers for the fourth quarter of 2026 is 7 percent on taxes owed but not fully paid. Again, that’s compounded daily.

4. The IRS cannot waive interest charges. That’s different from how the agency can treat penalty charges. The IRS can waive certain penalties for what it determines is reasonable cause. This is decided on a case-by-case basis considering all the facts and circumstances of your situation, and usually applies in major disaster situations. You can find more at IRS.gov’s penalty relief for reasonable cause page. You are still stuck, though, with the interest charges.

Coincidentally, there’s another pending COVID tax issue, this one also involving penalties (and interest). The IRS is appealing a U.S. Court of Federal Claims decision in Kwong v. United States last November that found the agency improperly collected tax penalties and interest during the COVID pandemic. Stay tuned for that one, too.

5. IRS pays interest, too. The sort of good news is that when the IRS collects too much from taxpayers, they might get interest on the money the tax agency held. However, that usually applies only when the IRS made an error in the processing of your return. And it also only pays when it doesn’t issue your refund within 45 days after the later of your return’s due date or the date you actually filed.

So, if you were due a refund but didn’t file for it until later (you have up to three years to do so), you are out of interest luck. You’ll just get your original refund amount, sans interest.

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