IRS Issues Tentative Refund Notice 2020-26 Providing Guidance for Taxpayers Claiming NOL Carrybacks

April 11, 2020

The IRS has issued guidance providing tax relief under the CARES Act for taxpayers filing a net operating loss (NOL) carryback claim. Notice 2020-26 grants a six-month extension to file such a claim for taxable years arising during calendar year 2018 and ending on or before June 30, 2019.

Though the CARES Act provides for a five-year carryback period for NOLs arising in tax years beginning after December 31, 2017 and before January 1, 2021, calendar year 2018 taxpayers would have been unable to file for the tentative carryback adjustment, as the original one-year timeframe to do so expired on December 31, 2019. Notice 2020-26 provides much-needed guidance, granting a six-month extension to file such a claim for taxable years arising during calendar year 2018 and ending on or before June 30, 2019.

Calendar year 2018 taxpayers now have until June 30, 2020 to file either Form 1139 or Form 1045, as applicable. Otherwise, taxpayers can file an amended return for the year to which the NOL is carried back. An amended return must be filed within three years of the earlier of the extended due date or date of filing for the year the NOL was incurred.

For further information concerning this new IRS guidance, please contact your Marks Paneth tax advisor. You may also reach out to our Response Team or visit our Pandemic Resource Center for additional updates and guidance on the coronavirus (COVID-19).

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