IRS Action on Decision AOD 2026-01, May 15, 2026

As experienced tax professionals, we have closely monitored the evolving interpretations of disaster relief deadlines under I.R.C. § 7508A(d). The recent release of the IRS’s Action on Decision (AOD) regarding the Tax Court’s unanimous holding in Abdo v. Commissioner, 162 T.C. 148 (2024), provides critical insight into the Service’s litigation strategy. While the AOD offers a nominal concession, a close reading reveals that the IRS is firmly entrenched in its position—a reality that directly explains its recent decision to appeal the expansive taxpayer victory in Kwong v. United States, No. 23-267 (Fed. Cl. Nov. 25, 2025).

Here is a breakdown of the AOD, the precise boundaries of the IRS's acquiescence, and what it means for practitioners navigating pandemic-era deadline extensions.

The Abdo Decision and the IRS’s Narrow Acquiescence

In Abdo v. Commissioner, the U.S. Tax Court evaluated the 2019 version of I.R.C. § 7508A(d), which provided a "Mandatory 60-day extension" for qualified taxpayers in federally declared disaster areas. The Tax Court unanimously held that this statute unambiguously established a self-executing, mandatory postponement period for time-sensitive acts, including the filing of a Tax Court petition. To reach this conclusion, the Court invalidated Treas. Reg. § 301.7508A-1(g)(1) and (2) to the extent those regulations limited the mandatory 60-day postponement to only those specific acts the Secretary previously selected under their discretionary authority in I.R.C. § 7508A(a). Consequently, the Tax Court found that the petitioners were entitled to an automatic postponement running from the disaster's earliest incident date (January 20, 2020) until at least March 20, 2020.

The IRS’s Action on Decision responds to this ruling with an exceptionally narrow concession. The AOD states that the IRS acquiesces only to the outcome that the COVID-19 disaster declarations created a mandatory 60-day postponement period specifically from January 20, 2020, to March 20, 2020.

Where the IRS Continues to Dispute the Tax Court

Beyond that 60-day window, the IRS yields no ground. The AOD explicitly states that the IRS does not acquiesce to the Tax Court's reasoning, nor to the invalidation of the Treasury Regulations.

The Service maintains that the phrase "in the same manner" found in the former I.R.C. § 7508A(d) is ambiguous and should be interpreted to require the Secretary to first exercise discretion under I.R.C. § 7508A(a) before any mandatory 60-day minimum postponement is triggered. Furthermore, the AOD aggressively draws a line in the sand regarding the duration of the relief, expressly rejecting "an interpretation that would result in any further postponement beyond the 60 days provided by the Tax Court in Abdo".

Impact on the Kwong Decision and the Federal Circuit Appeal

This refusal to accept any postponement beyond the initial 60 days perfectly frames the IRS's posture toward Kwong v. United States.

In Kwong, the U.S. Court of Federal Claims addressed the exact issue that the Abdo court intentionally left unanswered: the "outer limits" of the extension period for a disaster with an ongoing or open-ended incident period. The Kwong court applied the plain text of the 2019 version of I.R.C. § 7508A(d), noting that the statute extended deadlines until "60 days after the latest incident date". Because the COVID-19 disaster declaration remained open until May 11, 2023, the Court held that the mandatory deadline extension ran continuously from January 20, 2020, all the way to July 10, 2023.

The AOD demonstrates why this ruling has absolutely no impact on the IRS's overarching policy. By formally refusing to recognize any extensions beyond March 20, 2020, the IRS signaled that it considers the multi-year postponement granted in Kwong to be a severe misinterpretation of the tax code. The Service argues that an open-ended postponement creates "uncertainty in tax administration" and effectively allows the Federal Emergency Management Agency (FEMA) to unilaterally suspend tax timelines for years without the Treasury Secretary's input.

Because the IRS remains completely committed to defending its regulatory framework—which caps mandatory postponements and requires them to run concurrently with discretionary relief—it comes as no surprise that the Department of Justice officially filed a Notice of Appeal in Kwong v. United States, No. 1:23-cv-00267 on May 15, 2026.

Conclusion for Practitioners

The AOD serves as a clear warning to practitioners: the IRS will not administratively honor the expansive, multi-year deadlines recognized by the Court of Federal Claims in Kwong. As the Kwong case heads to the U.S. Court of Appeals for the Federal Circuit, tax professionals should expect the IRS to aggressively litigate any refund claims or petitions that rely on a COVID-19 statutory postponement extending beyond March 20, 2020. The rapidly approaching deadline to file protective refund claims for most taxpayers who could receive refunds related to penalties and interest during the COVID-19 national disaster remains unchanged at July 10, 2026.

Prepared with assistance from NotebookLM.