CARES Act NOL Provisions Important for Recovery, Orgs Say 

June 22, 2020

The Honorable Charles Grassley
Chairman
Senate Finance Committee
219 Dirksen Building
Washington, DC 20515

The Honorable Ron Wyden
Ranking Member
Senate Finance Committee
219 Dirksen Building
Washington, DC 20510

Dear Chairman Grassley and Ranking Member Wyden:

As the American business community strives to rebuild following the unprecedented challenges caused by the COVID-19 pandemic, we want to express strong support and appreciation for the provisions enacted in the CARES Act relating to net operating losses (NOLs). These beneficial changes come at a challenging time for many industries and will provide necessary liquidity for operations. We are concerned that some in Congress are seeking to reverse these changes and would urge you to leave them in place.

As you are aware, in response to the overwhelming adverse economic impact of the COVID-19 pandemic, Congress included in the bipartisan CARES Act several changes to the tax rules for NOLs. First, the CARES Act provides a five-year carryback for NOLs generated in 2018, 2019, or 2020. Second, the CARES Act suspends for 2018, 2019, and 2020 the otherwise applicable limitations on excess business losses for non-corporate taxpayers.

The ability to carryback NOLs is a critical component of a well-operating income tax system. Indeed, NOL carryback provisions have long been bipartisan tools utilized by lawmakers to provide liquidity and are routinely expanded during times of economic dislocation. As the non-partisan Joint Committee on Taxation has noted (see JCX-12R-20), the “provision allows taxpayers to use NOLs to a greater extent to offset taxable income in prior or future years in order to provide taxpayers with liquidity in the form of tax refunds and reduced current and future tax liability.” The provision suspending limitations on excess business losses for non-corporate taxpayers offers similar relief. As Chairman Grassley recently noted, the “key was for businesses to keep cash on hand, if they hadn't already filed, or get refunds to give them liquidity to keep the doors open, machinery running, and most importantly, employees paid, to the greatest extent possible.”

The tax and liquidity provisions in the CARES Act are helping to ensure that the severe economic situation created by COVID-19 do not become even worse. We urge Congress to protect American jobs by preserving the NOL carryback and suspension of limitation of excess busines loss provisions contained in the CARES Act.

Thank you for your consideration of our views.

Sincerely,

AdvaMed
Aeronautical Repair Station Association
Agricultural Retailers Association
Air Conditioning Contractors of America
Alabama Coal Association
American Chemistry Council
American Council of Engineering Companies
American Farm Bureau Federation
American Forest & Paper Association
American Foundry Society
American Gaming Association
American Institute of Architects (AIA)
American Iron and Steel Institute
American Supply Association
Associated Builders and Contractors
Associated General Contractors of America
CCIM Institute
Colorado Mining Association
Construction Industry Round Table (CIRT)
Convenience Distribution Association
Council of Insurance Agents and Brokers
Family Enterprise USA
Financial Executives International
Foodservice Equipment Distributors Association (FEDA)
Global Business Alliance
Heating, Air-conditioning, & Refrigeration Distributors International
Independent Community Bankers of America
Independent Electrical Contractors
Indiana Coal Council
Industrial Fasteners Institute
Institute of Real Estate Management
International Association of Plastics Distribution (IAPD)
International Foodservice Distributors Association
International Franchise Association
Kentucky Coal Association
Manufactured Housing Institute
National Association of Convenience Stores
National Association of REALTORS®
National Association of Wholesaler-Distributors
National Community Pharmacists Association
National Cotton Council
National Electrical Contractors Association (NECA)
National Fastener Distributors Association
National Marine Distributors Association
National Mining Association National Multifamily Housing Council
National Ready Mixed Concrete Association
National Restaurant Association
National Retail Federation
National RV Dealers Association (RVDA)
National Small Business Association
North American Association of Food Equipment Manufacturers (NAFEM)
Ohio Coal Association
Outdoor Power Equipment and Engine Service Association
Petroleum Marketers Association of America (PMAA)
Plumbing-Heating-Cooling Contractors
Portland Cement Association
PRINTING United Alliance
Retail Industry Leaders Association
S Corporation Association
Security Hardware Distributors Association
Small Business & Entrepreneurship Council
Society of Collision Repair Specialists (SCRS)
Society of Industrial and Office REALTORS®
Southeastern Lumber Manufacturers Association
Specialty Equipment Market Association
The Association for Hose and Accessories Distribution
The Fertilizer Institute
Tire Industry Association
Truck Renting and Leasing Association
U.S. Travel Association
Vinyl Institute
Virginia Coal and Energy Alliance
Wholesale Florist and Florist Supplier Association
Wyoming Mining Association