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IRS Sets Deadline for Temporary Fax Procedures for Refunds

Posted on Oct. 15, 2020

The IRS clarified in informal guidance that taxpayers looking to fax quick refund claims that stem from provisions in pandemic-related legislation can do so until the end of the calendar year.

The IRS on October 14 updated its FAQ on procedures taxpayers can use to temporarily fax quick refund claims stemming from the alternative minimum tax and net operating loss deduction changes in the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136).

Only claims that are filed on Form 1139, “Corporation Application for Tentative Refund,” or Form 1045, “Application for Tentative Refund,” for individuals, trusts, and estates, qualify for digital transmission, which the IRS started accepting April 17.

The CARES Act modified section 172 to address liquidity issues arising from the coronavirus pandemic by temporarily repealing the 80 percent NOL limitation and allowing deductions for loss carryovers and carrybacks to fully offset taxable income for tax years beginning before January 1, 2021.

The new law also allows taxpayers to carry back losses arising in tax years beginning in 2018 through 2020 for up to five years before the year of the loss.

With the Tax Cuts and Jobs Act’s repeal of the corporate AMT, Congress allowed companies to offset their regular tax liability by the amount of the AMT credit. Under section 53(e), credits remaining at the end of tax years beginning in 2018 to 2020 are refundable over several years, with the remaining amounts fully refundable for tax years beginning in 2021.

The CARES Act accelerated the recovery of the AMT credits by allowing companies to claim a refund on the remaining credits in 2018 or 2019.

In FAQ 21, the government said the last day to fax an eligible refund claim is December 31, 2020.

“The fax numbers listed herein will no longer be operational as of midnight on December 31, 2020,” the FAQ said. “The instructions to the Form 1139 and Form 1045 provide the applicable requirements for how to submit these forms to IRS.  The end of the faxing process is independent of any filing due dates.”

The IRS noted that the last day to file Form 1139 electing to take the 100 percent refundable minimum tax credit in 2018 is December 30, for example. The government also said if taxpayers file one application for a tentative refund and claim both the NOL carryback and the minimum tax credit at the same time, they must file the application by the earliest application deadline.

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