Part 1 of this two-part series covered the Kwong framework: three clocks, the Sec. 6654 trap, the California problem and the July 10, 2026, inference that is not actually a universal deadline.

Here, we’ll cover the workflow. Five steps. Most of it fits in a single afternoon if your prior-year files are clean.

A note up front: this is a screening exercise, not a guaranteed refund program. Most clients surfaced will fall away in the timing analysis. A smaller subset will warrant protective claims. That is the right shape.

This workflow is limited to penalty-and-interest screening. Separate workflows may apply to refund claims tied to original or amended returns, credits, or other filing deadlines.

Step 1: Run the Screen

Pull a penalty and interest report across prior year returns for items tied to deadlines between Jan. 20, 2020, and July 10, 2023.

Federal items to focus on:

• Sec. 6651 failure-to-file penalties

• Sec. 6651 failure-to-pay penalties

• Interest associated with those penalties

Items to analyze separately:

• Sec. 6654 estimated-tax penalties. Kwong did not provide relief for that taxpayer’s Sec. 6654 liability, and Sec. 6654 does not contain a broad reasonable-cause exception. Any Sec. 6654 issue requires separate analysis under the statutory waivers in §6654(e) and the taxpayer’s specific timing facts.

This step identifies files for further review. It does not establish that any claim is timely or recoverable.

Step 2: Apply the Federal Three-clock Analysis

For each file surfaced, run the three-clock test from Part 1 of this series:

• Sec. 6511(a): Would an administrative claim be timely under the three-years-from-filing or two-years-from-payment rule, taking the COVID disregarded period into account under one reading of pre-2021 Sec. 7508A(d)?

• Sec. 6511(b): If Sec. 6511(a) is met, do the lookback rules allow recovery of the amounts at issue?

• Sec. 6532(a)(1): If a prior claim was disallowed, is the two-year suit window still open under Kwong’s reasoning?

The Sec. 6511(b) lookback is the next filter but note that P.L. 119-64 added Sec. 7508A(f), which treats the disregarded COVID period as an extension of filing time for the Sec. 6511(b)(2)(A) lookback, pulling many COVID-window payments back inside the recoverable window. Still run it payment by payment, not just by return year: the extension is finite and deemed-payment rules can affect the calculation, so some payments will fall outside it.

Where the client already has a Sec. 6532 issue from a prior disallowance, Kwong’s reasoning applies most directly. Outside that scenario, applying Kwong’s Sec. 7508A analysis to Sec. 6511(a) administrative-claim timing is an inference from Kwong’s reasoning, not a direct holding. Frame the position accordingly in the file.

The clients worth pursuing are those where Sec. 6511(a) is plausibly still open under that layered analysis, Sec. 6511(b) does not zero out recovery, and the dollars justify the engagement.

Step 3: Prepare the Protective Claim Carefully

For many paid penalty-and-interest items, Form 843 may be the procedural vehicle. For unpaid amounts, the request may be framed as abatement rather than refund, and in some cases another procedural route may apply. Verify the proper vehicle before drafting.

A defensible claim narrative should:

• Identify the specific item—year, type, amount.

• Anchor the postponement in pre-2021 Sec. 7508A(d), referencing the COVID disaster declaration, FEMA’s May 11, 2023, incident-period close, and the July 10, 2023, endpoint as construed in Kwong.

• Cite Kwong and Abdo as supporting authority, framed as the Sec. 6532 timing decision and the Sec. 7508A(d) self-executing principle.

• Walk the Sec. 6511(a) analysis explicitly, including that the layered Sec. 7508A/Sec. 6511(a) reading is an inference from Kwong’s reasoning, not a Kwong holding.

• State the position with precision. The cases support deadline-postponement arguments cleanly. Broader theories on Sec. 6651 penalties or interest extend the reasoning rather than apply a settled point. Do not overclaim.

The IRS may deny the claim. That does not undermine the strategy. The government has appealed Kwong to the Federal Circuit, with its opening brief due July 20, and the federal landscape may shift. A timely protective claim preserves the client’s position regardless.

Step 4: Run the California Analysis Separately

For any client with California-side penalty or interest exposure, analyze the state issue independently under California law and procedure. Kwong does not itself determine California refund timing or California penalty treatment.

The practical takeaway is simple: do not extrapolate the federal Kwong result into California automatically. If a file has both federal and California exposure, each side needs its own limitations and procedural analysis.

Step 5: File, Document and Track

File the federal claim using the proper procedural vehicle and preserve proof of timely mailing.

File any California claim under the appropriate California procedure based on the item and posture involved.

Track aging. Federal and state agencies may take substantial time to respond.

Set client expectations explicitly. A protective claim preserves a position. It does not guarantee a refund.

Set Client Expectations Early

Clients should understand before engagement that:

• Some claims fail on Sec. 6511(a) timing.

• Some fail on the Sec. 6511(b) lookback even when Sec. 6511(a) is met. The P.L. 119-64 extension helps, but it is finite.

• Some are denied even when carefully prepared, because the law is unsettled.

• California may not follow the federal result.

• The Federal Circuit appeal could change the landscape.

• Recovery, if any, may take significant time from filing.

Upfront framing protects the engagement and the client relationship.

Bottom Line

Pull the penalty report. Run the three-clock test. Sequence the claim narrative carefully. Analyze California separately under California law. For clients whose facts support a preservation filing, evaluate whether July 10, 2026, is the operative protective-claim date and file before the earliest applicable deadline.

For most California practices, this is not a mass-refund opportunity. It is a screening exercise to identify the smaller subset of files for which a protective filing is worth making before any arguable window closes.

Handled as disciplined triage, this is a useful client-service project. Handled too broadly, it creates unnecessary risk for the firm and the client.

The clients who fit Kwong will benefit from the filing. The clients who do not will appreciate that you ran the analysis.

Either way, you have done the work.