Previously, we explained two cases, Abdo v. Commissioner, 162 T.C. 148 (2024) and Kwong v. U.S., 179 Fed. Cl. 382 (2025), in which courts interpreted section 7508A(d) in effect on January 20, 2020 in favor of mandatory relief during the COVID disaster period (January 20, 2020 through May 11, 2023 (plus 60 days (ending on July 10, 2023)).
Several questions regarding disaster relief under section 7508A lack answers, including:
- Whether the disaster period runs until July 10, 2023;
- Whether interest is suspended; and
- If interest is suspended, does the suspension apply to tax liabilities that arose prior to the effective date of the disaster declaration.
The Tax Court is considering these questions. This is important because the Tax Court is a court of national jurisdiction, which means that decisions in the Tax Court generally apply to taxpayers throughout the country.
The case is called Wepplo v. Commissioner, Docket No. 36722-21. The Wepplos owe tax from years prior to COVID (2015, 2016, and 2017). They argue that section 7508A(d), in effect during the COVID disaster period, suspended interest on those liabilities from January 20, 2020 through July 10, 2023.
The IRS’s position is that interest does not suspend, for three reasons. First, if the tax obligation arose before the disaster, then section 7508A(d) does not suspend interest on pre-existing liabilities. Second, the postponement period ended on March 20, 2020 (60 days after the date specified in the disaster declaration). Third, under section 7508A(a), the postponement cannot last longer than one year.
The Wepplos disagree. Their view is section 7508A(a)(2) requires the disaster period to be disregarded in computing interest; that regulatory language to the contrary applies only to discretionary relief under section 7508A(a) and not the mandatory relief in section 7508A(d); and that the statute contains no temporal exception. Further, they argue that interest continued to accrue during the disaster period because the liability was unpaid as of January 20, 2020, and that Abdo and Kwong were correctly decided.
In an order dated July 2, 2026, Judge Holmes noted that the issues in the case likely affect a significant number of taxpayers and invited amicus curiae to submit briefs. Of the nine briefs filed, the brief submitted by the Taxpayer Assistance Corporation addressed the importance of the issue. The remaining eight amicus curiae briefs presented the following arguments explicitly and implicitly supporting the Wepplos:
- The court should follow the reasoning of the U.S. Court of Federal Claims in Kwong, holding that the period of mandatory relief began on January 20, 2020 and ended on July 10, 2023, rather than March 20, 2020.
- The plain language of section 7508A(d), by incorporating section 7508A(a), permits suspension of interest. Under section 7508A(a)(2), interest on pre-disaster liabilities is suspended because section 7508A(a)(1) suspends interest accruing within the disaster period.
- Tax relief provisions are to be construed broadly.
- Since 1942, the Code has permitted suspension of interest for pre-event acts related to military events, then disaster events.
- Because interest accrues daily, each day’s interest is a new obligation.
- The examples in the Treasury regulations stating that interest is not suspended for pre-disaster acts either do not apply because they concern discretionary relief under subsection (a), or because they are invalid under Loper Bright, or they were promulgated during the window when the statute precluded interest relief generally.
Amici curiae briefs were filed by:
The IRS is permitted to respond (a “sur reply”) to the arguments raised by the Wepplos. The court will likely allow the IRS to also respond to the issues raised by amici.
At this point, we wait.
September 8, 2025. Written by Kim Tyson, J.D., LL.M.