On April 30, 2020, the IRS added four more FAQs and answers about temporary filing procedures for tentative carryback claims. Please see our April 14, 2020 alert that covers the first portion of the IRS’s procedural guidance and our April 17, 2020 alert that covers the additional guidance provided by the IRS.
The April 30, 2020 guidance added FAQs 15-18 and responded to the following questions:
Q: 15. Can Taxpayers who need to amend Forms 1120 or 1040 before filing Forms 1139 or 1045, still timely file Forms 1139 and 1045?
The IRS granted a six-month extension for filing an application for tentative refund to taxpayers who incurred an NOL either during calendar year 2018 or during a fiscal year that ended on or before June 30, 2019. This means the due date for filing such tentative refund claims is June 30, 2020. The IRS also said in its earlier guidance that taxpayers who need to file amended returns prior to filing tentative refund claims, needed to submit them separately for processing before the IRS could process Forms 1139 or 1045. The taxpayers’ concern was that the amended returns may not be processed in time for taxpayers to be able to file Forms 1139 or 1045.
In response to this concern, the IRS provided that those taxpayers who need to amend previously filed returns prior to filing Forms 1139 or 1045, should paper file the amended returns (Forms 1120X or 1040X), together with the tentative refund claims (Forms 1039 or 1045). This will allow taxpayers to timely file their tentative refund claims, but will probably result in longer processing times of the tentative refund claims because the IRS will first need to process the amended tax return before it can process the tentative refund claim.
Q: 16. Can Taxpayers who file Form 1120X electronically use temporary procedures for submission of Form 1139 via fax?
The IRS instructed those taxpayer who are filing Form 1120X electronically to notate on the Form 1139 that the Form 1120X was e-filed and specify the date that the filing was accepted, but notes it will not be able to process the Form 1139 before the electronically filed Form 1120X is processed. The timeliness for processing the Form 1120X will depend on taxpayer’s circumstances. The IRS also stated that as soon as the normal mailing operations resume it will be able to update taxpayers on the status of the adjustment per the amended return filing.
Q: 17. When can Taxpayers expect a refund from a Form 1139 or 1045 that was faxed under temporary procedures?
The IRS noted that the statutory timeframe for processing of tentative refund claims is 90 days, but is mindful that taxpayers need these refunds, which is why the temporary procedures were set up. However, the IRS also notes that that it must train employees on how to process these claims as well as how to do so from remote locations. In addition, the IRS acknowledges that it is operating with limited staffing, managing high volume of applications and adjusting to processing the refunds under a remote work environment.
Q: 18. May the temporary procedures be used to fax Form 1139 or 1045 to submit a tentative refund claim for either an NOL carryback or AMT credit associated with a previously filed Form 990-T?
No. The IRS instructs Form 990-T filers to mail an amended Form 990-T to the address shown in the instructions for the Form 990-T. The Forms 1139 or 1045 can be attached to the amended Form 990-T to allow the computation of the return claim.
