By: Donna Holm
In these uncertain times, small business owners have been faced with unprecedented challenges that have many scrambling for the much needed, though limited resources being offered by the Federal government under the CARES Act (Coronavirus Aid, Relief, and Economic Security Act). Much of the focus during the past two weeks has been on relief offered through the Payroll Protection Act. At this time, the well has dried up as we wait for additional aid to be released, causing further frustration among business owners with no end date in sight.
While filing deadlines have been extended, and payroll taxes deferred, many are still struggling to keep their business afloat. In 2017, the Tax Cuts and Job Act (TCJA) repealed some of the ways taxpayers can help with an influx of cash into their businesses. As a result, the CARES Act has propped up some of those decisions with some additional relief.
Under the original Act, the following changes were made to net operating losses. Those businesses that may suffer losses this year have been provided some relief. Note that these changes don’t apply only to corporations. Sole proprietorships and flow-through entities can also take advantage.
On April 9th, the IRS issued guidance for taxpayers with net operating losses. If you are in a loss position as of 2019, and/or will suffer further losses on 2020, filing a carryback claim may help you with an influx of cash outside of the loan programs. Revenue Procedure 2020-24 provides procedures for these carrybacks by:
Further, IRS Notice 2020-26 allows a six month extension of time to file for carrybacks. Revenue Procedure 2020-23 allows eligible partnerships to file amended partnership returns.
The ability to carryback losses for five years may enable some small businesses to flatten the curve when it comes to operating cash needs in these difficult times.
Starting on April 17, 2020 and until further notice, the IRS will accept eligible refund claims Form 1139 submitted via Fax to 844-249-6236 and eligible refund claims Form 1045 submitted via fax to 844-249-6237. Important note: These numbers are not for general use; taxpayers should not use these for anything besides Forms 1139 or 1045 (and accompanying materials). Other submissions will not be processed.