IRS Commissioner Charles Rettig responded sympathetically to the anxiety of bank and finance tax practitioners about delayed net operating loss carryback refund claims, but made no promises beyond the agency’s hard work.
“We are steadily processing the forms that we’re receiving,” and they’re entering the IRS’s examination workstream, Rettig said during a Bank & Capital Markets Tax Institute webinar December 3.
Rettig was responding to concerns of some finance and bank tax practitioners about IRS mail backlogs and delays processing Forms 1139, “Corporation Application for Tentative Refund.” The IRS’s Large Business and International Division has been preparing to receive a lot of them since passage of the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) allowed companies to carry back losses in tax years 2018 through 2020 for up to five years before the loss year.
“We are mindful of the desire to get the [NOL] refunds out quickly,” Rettig said. The tax agency has staff dedicated to NOL processing, he added.
The IRS can process about 1.3 million pieces of mail in a week, Rettig noted. The agency receives 400,000 to 500,000 pieces of mail per week, he added.
Rettig asked for practitioners’ patience with the agency’s response times to NOL claims and refund inquiries. There’s a lag time on processing when individuals need to get responses back from the agency, he said.
Effect on Filing Season Start?
Most of NOL claims processing can now be done by IRS employees who have become telework-eligible through the agency’s aggressive expansion in remote working during the coronavirus pandemic, Rettig said.
While the pandemic has imposed social distancing and other restrictions on close workplace interactions, Rettig said, “one of the benefits of putting 59,000 people in a telework environment is that it freed up a lot of other [physical] space.”
The IRS has been able to distribute once-centralized workloads among multiple facilities and maintain processing speeds, Rettig said.
The unopened mail backlog at the IRS’s four receiving facilities, totaling more than 23 million pieces in July, had been reduced to less than 3 million by November, Rettig said.
Some are worried that the mail backlog and carryover from the last fiscal year might affect the IRS’s readiness for the 2020 tax return filing season, Rettig said. But the carryover is now just slightly above the agency’s norms, he added.
Barring an interruption in agency funding such as another partial government shutdown, or negative developments in the pandemic, the agency should be able to pin down a filing season opening date by mid-January 2021, the commissioner said.