The Internal Revenue Service is giving taxpayers until the end of the year before it stops its temporary procedures for faxing in Forms 1045 and 1139 for claiming tentative tax refunds, instead of mailing them, which it has allowed as part of its response to the COVID-19 pandemic.
In April, the IRS began allowing taxpayers to file both forms by fax while many IRS employees worked remotely and were unable to process the mail.
Alex Selarnick is an associate at Goodwin who advises insureds, insurers, and insurtechs, as well as their lenders and investors on a broad range of compliance, regulatory and transactional matters. Mr. Selarnick’s practice focuses on the intersection of insurance and technology, and he frequently works with clients on the legal and regulatory challenges associated with the use of technology in the insurance space. Mr. Selarnick also has extensive trade credit insurance experience, and he guides market leading supply chain and trade finance companies on the development and negotiation of international credit insurance programs.
Greg Hoffnagle is a partner in Goodwin’s Financial Industry group and Insurance practice. Mr. Hoffnagle guides insurtechs, emerging and technology companies, venture capital and private equity firms and other insurance-related service companies through cutting-edge compliance, regulatory and transactional matters.
With a particular focus on the intersection of insurance and technology, a considerable part of Mr. Hoffnagle's advisory work involves working with technology clients in creating innovative products and bringing them to market quickly, from choosing an operating structure to licensing and regulatory issues. Mr. Hoffnagle is an experienced litigator for complex insurance and reinsurance related disputes, as well as international commercial arbitrations and internal investigations. He is also a trusted advisor for companies and institutions on risk management issues and complex insurance claims.
Kristina Leach is a director of BFSI (banking, financial services and insurance) insights at Quantum Metric. As a go-to-market and industry lead, Kristina provides expertise that supports financial institutions ability to optimize the digital customer experience. Prior to joining Quantum Metric, Kristina earned her MBA at MIT Sloan School of Management and worked for Bain & Co, Fidelity Investments and MassMutual holding roles across various functions.
An individual, estate or trust can file Form 1045, Application for Tentative Refund, to apply for a quick tax refund resulting from the carryback of a net operating loss, the carryback of an unused general business credit, the carryback of a net section 1256 contracts loss, or an overpayment of tax due to a claim of right adjustment under section 1341(b)(1) of the Tax Code.
Corporations (other than S corps) can file Form 1139, Corporation Application for Tentative Refund, to apply for a quick refund of taxes from the carryback of a net operating loss (or a loss from operations of a life insurance company), the carryback of a net capital loss, the carryback of an unused general business credit, or an overpayment of tax from a claim of right adjustment under section 1341(b)(1).
The CARES Act, which Congress passed in March in response to the coronavirus crisis, included some provisions allowing companies to carryback their net operating losses for five years and file refund claims, giving them a quick capital infusion in the midst of the pandemic. Taxpayers with a net operating loss arising in a tax year starting in 2018, 2019 or 2020 can carry that loss back to each of the five preceding years unless the taxpayer elects to waive or reduce the carryback. The law also allows a carryback for a two-year period of NOLs for a tax year that began in 2017 and ended during 2018.
Another section of the CARES Act modifies the credit for prior-year minimum tax liability of corporations, including to accelerate the recovery of remaining minimum tax credits of a corporation for its 2019 taxable year from its 2021 taxable year and to allow a corporation to elect instead to recover 100 percent of any of its remaining minimum tax credits in its 2018 taxable year. In April, the IRS began allowing taxpayers on a temporary basis to fax in Forms 1045 and 1139 to expedite the tax refund process.
However, on Wednesday, the IRS added an entry to its Frequently Asked Questions page describing the temporary procedures to say the procedure will end on Dec. 31, 2020. After midnight on New Year’s Eve, the fax numbers will no longer be operational. The IRS noted that the end of the faxing process is independent of any filing due dates. For example, the last day to file Form 1139 electing to take the 100 percent refundable minimum tax credit in 2018, is Dec. 30, 2020.
“Additionally, if you file one application for a tentative refund and claim both the NOL carryback and the minimum tax credit at the same time, you must file the application by the earliest applicable deadline,” the IRS noted.
