IRS provides info on claiming quick refunds of NOLs amid coronavirus

The Internal Revenue Service posted a set of questions and answers Monday to help companies claim net operating losses and tax credits for prior years so they can get faster tax refunds in the midst of the novel coronavirus pandemic.

The FAQ page describes how companies can fax Forms 1139 and 1045 to the IRS to receive the money faster.

Last week, the IRS issued some guidance about the tax relief provided under the CARES Act for taxpayers with net operating losses to help them deal with the COVID-19 pandemic. The IRS also recently issued tax relief for partnerships filing amended returns.

Revenue Procedure 2020-24 provides guidance to taxpayers with net operating losses that are carried back under the CARES Act by providing procedures for waiving the carryback period in the case of a net operating loss arising in a taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2021, disregarding certain amounts of foreign income subject to transition tax that would normally have been included as income during the five-year carryback period, and waiving a carryback period, reducing a carryback period, or revoking an election to waive a carryback period for a taxable year that began before Jan. 1, 2018, and ended after Dec. 31, 2017.

In Notice 2020-26, the IRS gave a six-month extension of time to file Form 1045 or Form 1139, as applicable, with respect to the carryback of a net operating loss that arose in any taxable year that began during calendar year 2018 and that ended on or before June 30, 2019. Individuals, trusts and estates would file Form 1045, and corporations would file Form 1139.

Last week, the IRS also issued Revenue Procedure 2020-23, enabling eligible partnerships to file amended partnership returns using a Form 1065, U.S. Return of Partnership Income, by checking the “Amended Return” box and issuing amended Schedules K-1, Partner’s Share of Income, Deductions, Credits, to each of its partners. Partnerships filing these amended returns should write “FILED PURSUANT TO REV PROC 2020-23” at the top of the amended return.

In the FAQ page that it posted Monday, the IRS described how to fax Forms 1139 and 1045 to claim quick refunds of the credit for prior year minimum tax liability of corporations and net operating loss (NOL) deductions. Until further notice, the IRS is implementing temporary procedures for digital transmission of Form 1139 and Form 1045. Starting April 17, 2020, and until further notice, the IRS said it will accept eligible refund claims Form 1139 submitted by fax to (844) 249-6236 and eligible refund claims Form 1045 submitted by fax to (844) 249-6237. Before that date, the fax numbers won’t be operational. The IRS is encouraging taxpayers to wait until this procedure is available instead of mailing in their Forms 1139 and 1045 since mail processing is being affected by the coronavirus emergency. A maximum of 100 pages can be initially faxed to either of the fax numbers. If more documentation needs to be attached or seems necessary, taxpayers will be notified during the processing of Form 1139 or 1045.

The fax numbers are just meant to be temporary and not permanent ways to send the tax forms. The IRS said that accepting faxed versions of these forms that are normally delivered through the U.S. Postal Service or by a private delivery service is meant as a short-term measure to assist taxpayers in receiving refunds provided under the CARES Act as quickly as possible.

The IRS doesn’t plan to establish a similar fax procedure for Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax. Form 4466 needs to be filed in accordance with the current form instructions. If a Form 4466 is faxed to the fax numbers above, it won’t be accepted for processing.

Andrew Harrer/Bloomberg