Among the valuable tax savings in the Coronavirus Relief, Aid and Economic Security (CARES) Act is the ability to carry back net operating losses (NOLs). This tax strategy was eliminated in the Tax Cuts and Jobs Act of 2017.
The CARES Act allows businesses and individuals to carry back NOLs arising in tax years beginning after December 31, 2017 and before January 1, 2021, to each of the five taxable years preceding the years in which the losses arose. This allows for significant tax savings when NOLs are carried back from a year when a taxpayer is in a lower tax rate to a year when their tax rate was higher.
The IRS is required to process NOL refund claims (Form 1139 or Form 1045) and issue payment within 90 days after receiving the claim. This process will be expedited even further during the COVID-19 pandemic once the IRS begins accepting these claims by fax. This is in response to the limited staff and services in their offices.
Beginning on April 17, 2020, the IRS will begin temporarily accepting both forms by fax at 844-249-6236 (Form 1139) and 844-249-6237 (Form 1045). This triggers the 90-day period immediately upon receipt. Previously, hard copies of these claimed were required to be submitted to the IRS by mail.
If you have already mailed an eligible claim, you may resubmit it by fax. If the refund claim is deemed ineligible by the IRS, it will be processed when normal operations are resumed.
