Updates to fax submission procedures for Forms 1139 and 1045

On April 13, 2020, the IRS issued temporary procedures in the form of questions and answers for processing quick refund claims, Forms 1139 and 1045.

On April 16, 2020, late in the evening, the IRS provided additional guidance to address many of the taxpayers’ questions, including the procedures for requesting a refund of minimum tax credits and whether the Form 1139 can be filed to carry back net operating losses (NOLs) and request a refund of “released” corporate minimum tax credits. 

Please note that these are modified filing procedures for Forms 1139 and 1045 in response to the COVID-19 pandemic. These procedures will be in effect until further notice. Beginning today, April 17, 2020, taxpayers are able to submit Forms 1139 and 1045 to the IRS via fax.  

Forms 1139 may be faxed to 844-249-6236 and eligible Forms 1045 may be faxed to 844-249-6237. The IRS will still have 90 days to process tentative refund claims. 

Faxed submissions cannot exceed 100 pages. The IRS will contact taxpayers if additional documentation or information is needed to process eligible Forms 1139 or 1045. Please see our prior alert that covers the first portion of the IRS’s procedural guidance for filing Forms 1139 or 1045. The additional guidance is contained in FAQs 8 – 14 and provides much-needed answers to taxpayers’ questions. 

No fax submission of Forms 4466 or 1120X

The IRS emphasized that the temporary fax procedures will not be established for processing of Forms 4466, Quick Refund of Estimated Tax or Form 1120X, Amended U.S. Corporation Income Tax Return. The Form 4466 must be hard-copy filed via USPS or private delivery service. The Form 1120X must be filed under normal procedures; e-filed, if applicable, or hard-copy filed via USPS or private delivery service.

The numbers on the Form 1139 must exactly match the numbers in the taxpayer’s tax account

IRS requires that the numbers on the Form 1139 exactly match the taxpayer’s information in the taxpayer’s IRS account. What this means is that if you filed Form 1120X that has not been processed yet and you used the numbers from the Form 1120X on your Form 1139, IRS will not be able to process such Form 1139. The Form 1139 will be rejected and must be re-submitted using the information related to the processed income tax return plus any adjustments made by the IRS, either as the result of a processed amended return or an IRS examination adjustment.  

How do I prepare Form 1139 to request a tentative refund of the refundable prior year minimum tax credits?

The current version of Form 1139 (published in 2018) has not been revised to allow taxpayers to account for relief provided by Coronovirus Aid, Relief, and Economic Security Act (CARES Act) –  particularly regarding a request for a tentative refund application for prior year minimum tax credits per section 2305(b). Therefore, the IRS outlined the following instructions specifically for taxpayers who are ONLY claiming tentative refund of prior year minimum tax credits:

Form 1139

• Include at the top of Form 1139, “Electing to Take 100% Refundable Credit Amount in 2018 - per CARES Act Section 2305(b)”.
• Complete Lines 1(d) and 29 of the Form 1139. Leave Lines 1a through 1c and 2 through 28 blank. 
• Enter on Line 1(d) the minimum tax credit carryforward to 2019, as reported on the original Form 8827 Line 9. Disregard the instructions for Form 1139, Line 1(d) “Other.”
• Enter on line 29, the difference between the amount reported on the original 2018 Form 8827 Line 8(c) and the amount reported on the revised 2018 Form 8827 Line 8(c) as described below. Disregard the instructions for Form 1139, Line 29 “Overpayment of tax due to a claim of right adjustment under section 1341(b)(1).”

Form 8827

• Include at the top of 2018 Form 8827, “Electing to Take 100% Refundable Credit Amount in 2018 - per CARES Act Section 2305(b).” 
• When completing Line 6 of the Worksheet for Calculating the Refundable Minimum Tax Credit Amount on 2018 Form 8827 replace "50%" in the instructions on Line 6 with "100%." 
• Complete the remainder of 2018 Form 8827 according to the instructions.

IRS recommends attaching the following documents when the taxpayer only requests the refund of minimum tax:

1. The first three pages of the originally filed or amended (if previously processed) 2018 Form 1120, including Schedule J (marked “as originally filed or adjusted”);
2. A copy of the originally filed 2018 Form 8827 (marked “as originally filed”); 
3. The first three pages of the revised 2018 Form 1120, reflecting the change with the 100% refundable minimum tax credit (marked “as revised”); and 
4. The revised 2018 Form 8827 (marked “as revised”). 

What if I have both an NOL carryback and the 100% refundable minimum tax credit? Can I use the same Form 1139 (2018)?

The IRS guidance states that the same Form 1139 can be used to both carry back NOLs and request a refund of the minimum tax credit.

These following procedures should be followed:

Form 1139

• Complete Lines 1a through 1c and 2 through 28 as appropriate, following the existing Form 1139 instructions to report your NOL carryback.
• Enter on Line 1(d) the minimum tax credit carryforward to 2019, as reported on the original Form 8827 Line 9. Disregard the instructions for Form 1139, Line 1(d) “Other.”
• Enter on Line 29, the difference between the amount reported on the original 2018 Form 8827 Line 8(c) and the amount reported on the revised 2018 Form 8827 Line 8(c) as described below. Disregard the instructions for Form 1139, Line 29 “Overpayment of tax due to a claim of right adjustment under section 1341(b)(1).”

Form 8827

• Include at the top of 2018 Form 8827, “Electing to Take 100% Refundable Credit Amount in 2018 - per CARES Act Section 2305(b).” 
• When completing Line 6 of the Worksheet for Calculating the Refundable Minimum Tax Credit Amount of the 2018 Form 8827 replace “50%” in the instructions on Line 6 with “100%.” 
• Complete the remainder of 2018 Form 8827 according to the instructions.

Please note that ordering rules apply when the Form 1139 is used to both carry back NOLs and request a refund of the minimum tax credit. Taxpayers must account for adjustments due to the NOL carryback first, before determining the amount of the 100% refundable minimum tax credit.

The following documents should be attached to the Form 1139 that is requesting both a tentative refund of tax resulting from an NOL carryback and a tentative refund of prior year minimum tax. Be sure to write on the top of the Form 1139: “NOL Carryback and Electing to Take 100% Refundable Credit Amount in 2018 - per CARES Act Section 2305(b).” 

1. For Forms 1139 that are only claiming the NOL carryback, following the existing instructions for the Form 1139.
2. For Forms 1139 that are claiming both a refund of the minimum tax credit and the NOL carryback, 

• Follow the existing instructions for Form 1139 for the NOL carryback and attach the required forms identified in the instructions to the Form 1139, taking into account the NOL carryback first, then attach: 
  • The first three pages of the originally filed or amended (if previously processed) 2018 Form 1120, including Schedule J (marked ‘as originally filed’);
  • A copy of the originally filed 2018 Form 8827 (marked ‘as originally filed’); 
  • The first three pages of the revised 2018 Form 1120, reflecting the change with the 100% refundable minimum tax credit (marked ‘as revised’); and
  • The revised 2018 Form 8827 (marked ‘as revised’). 

The IRS specifically requests taxpayers to not file amended returns at the time of filing Form 1139. Such amended tax returns will not be processed if submitted via fax. 

The IRS will contact a taxpayer’s representative or the taxpayer at the phone number listed on the Form 1139 if they have any questions while processing the Form 1139 or need to authenticate certain information. Though it is not required by the IRS, consider attaching a Power of Attorney (Form 2848) to the Form 1139 filing package if someone else, other than the person signing the Form 1139, has first-hand knowledge of the information on the Form 1139. Line 3 of the Form 2848 should refer to ‘Form 1120’for the loss year and each carryback year. This will allow the authorized representative to correct any errors or respond to any questions from IRS personnel processing Form 1139 and thereby avoid rejection of the claim.

Taxpayers who are currently under exam cannot have the Form 1139 processed by the examiner and must use the filing procedures discussed above.