The CARES Act added provisions allowing taxpayers to carry net operating losses from 2018 and 2019 back five years, potentially giving affected taxpayers access to much needed cash by filing a claim for refund. And the IRS has issued guidance allowing the Forms 1045 and 1139 to be used to claim the refunds under the tentative refund procedures.

But there is a problem—those forms cannot be filed electronically, and the IRS is not processing paper filed forms at this time, as all Service Centers have now been closed for an indefinite period of time. In order to address this issue, the IRS has released on its website temporary procedures for filing Forms 1045 and 1139 by fax.[1]

Some taxpayers who elected to be “electing real property trades or businesses” based on the provisions of §163(j) prior to amendment by the CARES Act likely regretted their decisions once the Act retroactively changed the limit from 30% of adjusted taxable income to 50% of adjusted taxable income temporarily. The IRS is now giving those taxpayers a chance to undo that election based on guidance in Revenue Procedure 2020-22.[1]

As well, the Procedure covers other new elections that are part of the CARES Act to deal with the changes made by that Act to §163(j).

The IRS has released a set of frequently asked questions on the deferral of the employer’s share of the FICA Old Age Survivor’s and Disability insurance tax, a provision added by the CARES Act.[1] While summarizing the relief provided in the Act, the FAQ also provides answers to some questions that had been raised under the provision.

The IRS is moving to simplify the filing of net operating loss carryback claims to take advantage of the CARES Act revisions to NOL provisions, by extending for six months the time period a tentative carryback form (Forms 1045 and 1139) may be filed, per Notice 2020-26.[1]

The CARES Act restored the ability to carryback net operating losses temporarily. The loss carrybacks were restored for 2018, 2019 and 2020, with special provisions provided for electing to carry losses from 2018 and/or 2019 forward to take care of the problem that it was too late in many cases to timely elect to forego the carryback period. In Revenue Procedure 2020-24[1] the IRS has provided procedures for actions related to these net operating losses.

The IRS has again expanded due date relief in Notice 2020-23,[1] explicitly providing relief for forms that are filed with the Form 1040 (such as Schedule H) and more general relief for certain time sensitive acts that occur between April 1, 2020 and July 15, 2020.

The Notice provides the following relief:

The Secretary of the Treasury has determined that any person (as defined in section 7701(a)(1) of the Code) with a Federal taxpayment obligation specified in this section III.A (Specified Payment), or a Federal tax return or other form filing obligation specified in this section III.A (Specified Form), which is due to be performed(originally or pursuant to a valid extension) on or after April1, 2020,and before July 15, 2020,is affected by the COVID-19 emergency for purposes of the relief described in this section III (Affected Taxpayer).

The Small Business Administration has added two additional questions to the Paycheck Protection Program (PPP) Loans Frequently Asked Questions[1] page originally posted on April 6. The new version, dated April 8, discusses the use of a lender’s own promissory note and issues related to the beginning of the 8-week forgiveness period and the timing of funding the loan.

The Centralized Partnership Audit Regime (CPAR) added by the Bipartisan Budget Act of 2015 effectively barred partnerships that did not opt out of the regime from filing an amended return and sending out amended K-1s for prior years. Since many partnerships do not qualify to opt-out of the CPAR regime, a large number of partnerships had no ability to change a previously filed return once the period for filing a superseding return had passed.

This feature of the CPAR regime has now proved a major impediment to partners receiving the sort of retroactive benefits Congress added in the CARES Act, such as the use of bonus depreciation or a 15-year life on qualified improvement property. Recognizing the problem, the IRS has issued a Revenue Procedure allowing CPAR partnerships to temporarily file an amended Form 1065 and issue amended K-1s to partners (Revenue Procedure 2020-23).

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Some key additional information related to the Payroll Protection Program loans has been provided by the Small Business Administration in the evening of April 6, 2020. The agency posted an updated “Paycheck Protection Program Loans Frequently Asked Questions (FAQ)”[1] that addressed some questions that had been left unanswered by the original guidance.

This article looks at most of the items, but not all, contained in the FAQ. Most notably, the article doesn’t look at the special rules that may apply to some businesses that may expand this program to cover an employer that otherwise would seem excluded either under the 500 employee test or more general qualifications for participation in SBA programs. Those are found in the FAQ in questions 2 and 3.

The IRS continued to expand the return filings that will have a delayed due date due to the national emergency declared by the President under the Stafford Act. Gift and generation skipping transfer tax returns originally due on April 15, 2020 will now be due on July 15, 2020, per Notice 2020-20.[1] Originally the IRS had indicated in the FAQ related to the extended filings that gift tax returns would not be granted the extended time to file.

The IRS, lining up with the Department of Labor’s start date for the mandatory sick time related to COVID-19 that was enacted in the Families First Coronavirus Response Act, has announced in Notice 2020-21[1] that the effective date for the refundable payroll tax credit is April 1.

Thus, employers will first qualify for the payroll tax credits, and self-employed individuals for the credit for self-employment taxes, for leave beginning April 1, 2020. No credit will be allowed for any such leave taken before that date.

The IRS released a set of frequently asked questions that provide additional details regarding the relief initially granted in Notice 2020-18 for the extension of time to file income tax returns due on April 15, 2020 and related income tax payments due on that date.[1]

In Notice 2020-18 the IRS provided for an extension of time to file the 2019 individual income tax return and first estimated tax payment for 2020, using Treasury’s authority granted under IRC §7508A due to the emergency under the Stafford Act declared by the President. But there were a number of questions about other acts that are also tied to that date and whether there was additional time for them.

As part of the Families First Coronavirus Response Act (HR 6201),[1] employers of less than 500 employees face mandatory provision of sick time[2] and paid family leave[3] but are eligible for a refundable payroll tax credit to offset the costs. The bill was signed into law by the President on March 18, 2020.

The analysis below is based on a review of the provisions written immediately after the law was enacted. Readers should confirm all details independently. As well, the Department of Labor and other agencies will be issuing guidance in the application and interpretation of these provisions. Readers need to watch for such developments as they occur.