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IRS Provides Temporary Procedures for Faxing Certain Forms 1139 and 1045

(Parker Tax Publishing May 2020)

In response to the COVID-19 pandemic and solely to implement certain provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) relating to the filing of refunds for net operating losses, the IRS has implemented temporary procedures for digital transmission of Form 1139, Corporation Application for Tentative Refund, and Form 1045, Application for Tentative Refund. Only claims allowed under Sections 2303 and 2305 of the CARES Act that are made on Form 1139 or Form 1045 are eligible refund claims under these temporary procedures (IRS Website FAQs on Faxing Forms 1139 and 1045).

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. Section 2303 of the CARES Act made several modifications to net operating losses (NOLs), including requiring a taxpayer with an NOL arising in a tax year beginning in 2018, 2019, or 2020 to carry that loss back to each of the five preceding years unless the taxpayer elects to waive or reduce the carryback. It also provides for a carryback for a two-year period of NOLs arising during a tax year that began in 2017 and ended during 2018.

Section 2305 of the CARES Act modified the credit for prior-year minimum tax liability of corporations, and accelerated the recovery of remaining minimum tax credits of a corporation for its 2019 tax year from its 2021 tax year and permits a corporation to elect instead to recover 100 percent of any of its remaining minimum tax credits in its 2018 tax year.

The IRS has implemented temporary procedures for digital transmission of Form 1139, Corporation Application for Tentative Refund, and Form 1045, Application for Tentative Refund, that relate to these changes made in the CARES Act. Only claims allowed under Sections 2303 and 2305 of the CARES Act that are made on Form 1139 or Form 1045 are eligible refund claims under these temporary procedures, which are described below.

The IRS announced on its website that, starting on April 17, 2020, and until further notice, it will accept eligible refund claims on Form 1139 submitted via fax to 844-249-6236, and eligible refund claims on Form 1045 submitted via fax to 844-249-6237. These numbers are not for general use and taxpayers should not use these fax numbers for anything besides Forms 1139 or 1045 (and accompanying materials). Other submissions will not be processed, the IRS said.

The IRS is encouraging taxpayers to use this fax method rather than mail their Forms 1139 and 1045 since mail processing is being impacted by the COVID-19 emergency. The IRS website includes FAQs about this process, including the following.

In the FAQs, the IRS noted that if a taxpayer previously mailed a hard copy of either of these forms that is an eligible refund claim (because it contains changes permitted by the AMT and NOL provisions of the CARES Act identified above) after March 27, 2020, the taxpayer can now submit that same claim to the fax numbers stated above. If a Form 1139 or Form 1045 faxed as instructed above is deemed an ineligible refund claim under the temporary fax procedure, the IRS said it will process the forms after normal operations resume.

According to the IRS, accepting faxed versions of these forms that are normally delivered through the USPS or by a private delivery service is meant as a short-term measure to assist taxpayers in receiving refunds provided under the CARES Act as quickly as possible.

The FAQs state that a taxpayer's Form 1139/1045 must reflect the taxpayer's originally filed or previously processed amended information. If the taxpayer's Form 1139/1045 does not match the taxpayer's IRS account, the Form 1139/1045 will not be processed because the Form 1120-X/1040-X needs to be processed first. For example, if the taxpayer gave a Form 1120-X/1040-X to an IRS examination team, it has not been processed.

The FAQs also state that a taxpayer should not attempt to fax an amended return at the time of faxing Form 1139/1045. Amended returns will not be acted upon when faxed with Form 1139/1045 through the temporary procedures.

The IRS noted that the current version of Form 1139 (2018) does not provide for tentative refunds for refundable prior year minimum tax credits. The FAQs on the IRS website provide instructions as to how the Form 1139 and Form 8827, Credit for Prior Year Minimum Tax - Corporations, should be completed if the taxpayer is only claiming tentative refunds of prior year minimum tax credits.

The IRS noted that, if there is missing information or questions about a taxpayer's filing, the taxpayer will be contacted by phone. Thus, the IRS said, it is important to ensure that the taxpayer's name and phone number are accurately reflected on the Form 1139/1045. The person listed will need to be able to provide the missing information and possibly authentication information.

For a discussion of the changes to the net operating loss rules as a result of the CARES Act, see Parker Tax ¶99,105.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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