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IRS Says Wait for Guidance Before Filing CARES Act Refund Claims

Posted on Apr. 9, 2020

Corporate and individual taxpayers looking to file refund claims based on relief in the coronavirus relief bill should wait until the IRS issues specific instructions, according to an agency statement.

“The IRS is aware that there are questions from practitioners and taxpayers on the filing of corporate and/or individual refund claims that may be available under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) [P.L. 116-136]. The IRS is currently exploring available options and expects to issue filing instructions in the coming days. The IRS recommends that taxpayers await further instruction before utilizing traditional processes. Additional information will be posted to irs.gov.,” the agency said in the April 8 statement.

The CARES Act included several business tax relief provisions that could provide taxpayers with tax refund opportunities.

The same day it issued the statement, the IRS provided broad relief for partnerships eager to take advantage of the CARES Act but facing the restrictions of the new partnership audit regime.

Some taxpayers may want to file refund claims to take advantage of the retroactive technical correction to section 168 that allowed qualified improvement property to be eligible for bonus depreciation under the Tax Cuts and Jobs Act. They are looking for guidance to help them weigh different methods of taking advantage of the change, such as amended returns requesting refunds for 2018 or accounting method changes with corresponding section 481(a) adjustments.

The CARES Act also relaxed two of the TCJA’s restrictions on net operating losses and interest deductions. Practitioners are looking for guidance on all three provisions, especially for consideration of their potential interactions.

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