David Schultz (Bloomberg), Business Group Urges Tax Court to Stop Covid-19 Interest Accrual:
Interest that accrued on unpaid taxes during the Covid-19 pandemic should be wiped out because of the text, structure, and history of a disaster relief statute, according to a brief filed in US Tax Court by the US Chamber of Commerce.
The Chamber is encouraging the court to take a broad view of a federal statute that suspends some tax deadlines during a federally declared disaster in its Monday amicus brief. Congress enacted the statute just months before the beginning of the pandemic, and whether it applies to the ensuing nationwide, years-long disaster declaration is a question among numerous federal courts.
In the case at issue, Wepplo v. Commissioner, the taxpayers’ debts predate Covid-19. But they because the disaster relief statue at issue — IRC § 7508A — still applies, the IRS shouldn’t have assessed interest on their debts during the pandemic.
The IRS disagrees and says the statute doesn’t apply to preexisting tax debts and also that the pandemic disaster declaration period was much shorter than the taxpayers say it was. However, the Chamber says the petitioners’ reading of the statute “accords with common sense” because “the significance of disaster-period interest relief does not depend on whether an underlying liability became due the day before a disaster or the day after it,” the Chamber said.
The Tax Court is one of many tribunals grappling with how to interpret this statute.
In 2025, the US Court of Federal Claims was among the first to rule that the pandemic disaster declaration, which lasted from early 2020 through the summer of 2023, did affect certain tax deadlines. The government is appealing that case, Kwong v. United States, to the US Court of Appeals for the Federal Circuit.
Since then, the Kwong ruling has been cited in New York, Maryland, and other Tax Court cases.
In Wepplo, Judge Mark Holmes asked the public to file amicus briefs in the case earlier this summer because the question the case brings up is “one that appears to affect a potentially very large number of taxpayers and may be of some importance to the tax system.”
