Taxpayers with net operating losses (NOLs) incurred during calendar year 2018 previously had until June 30, 2020 to file applications for tentative refunds on either of Forms 1139 or 1045. However, on June 29, 2020, one day before the filing deadline, the IRS clarified that filing Forms 1139 or 1045 are specified time-sensitive actions for which an extended deadline of July 15, 2020 applies.
Taxpayers and tax professionals were notified of this decision when FAQ 20 was added to the temporary procedures issued regarding the submission of Forms 1139 and 1045 on June 29. The CARES Act authorized taxpayers with NOLs incurred in 2018, 2019 and 2020 to carry back those NOLs to the five previous tax periods. Absent any relief from the IRS, taxpayers who filed calendar year 2018 returns would normally have a Dec. 31, 2019 deadline to file Forms 1045 or 1139 – which had already expired when the CARES Act was enacted. Notice 2020-26 was issued to establish procedures for carrying back those losses and granted a six-month extension of time to file for taxpayers with NOLs that arose in a taxable year that began in calendar year 2018 and ended on or before June 30, 2019.
The IRS previously issued Notice 2020-23, which extended certain listed time sensitive acts falling between April 1, 2020 and July 15, 2020 to July 15, 2020. Forms 1139 and 1045 were not previously included in Notice 2020-23. But, as of June 29, 2020, those taxpayers previously granted relief under Notice 2020-26 with a six-month extension have now been extended additional relief under Notice 2020-23. Therefore, taxpayers with Forms 1045 and 1139 due after April 1, 2020 and on or before July 15, 2020 will now have until July 15, 2020 to file.
This clarification comes as a relief to both taxpayers and tax professionals who have been advocating for an extension of the June 30, 2020 deadline. In a request issued on June 24, 2020, the AICPA suggested an Oct. 31, 2020 deadline to allow for partnerships amending 2018 partnership returns to report NOLs as amended. An Oct. 31, 2020 due date would provide taxpayers sufficient time to determine the amount of their 2018 NOL available to carry back upon receiving any 2018 amended partnership Schedules K-1.
Though the IRS has not granted the Oct. 31, 2020 deadline request nor acknowledged the issue partners awaiting amended Schedule K-1s may have in meeting the July 15, 2020 deadline to file Forms 1139 or 1045, the issuance of FAQ 20 indicates that the Service may be listening to taxpayer concerns regarding upcoming deadlines.