IRS provides additional extension relief, guidance on NOL carrybacks

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April 2020


The IRS on April 9 issued Notice 2020-23, announcing the automatic extension of additional key tax deadlines for individuals and businesses. This announcement follows last month’s announcements in (1) Notice 2020-18, providing that taxpayers generally have until July 15 to file and pay federal income taxes originally due on April 15, and (2) Notice 2020-20, providing additional automatic extension relief, postponing certain federal gift (and generation-skipping transfer) tax return filings and payments. Notice 2020-23 generally expands this automatic extension relief to all taxpayers that have a filing or payment deadline falling on or after April 1 and before July 15 (originally or pursuant to a valid extension). 

The IRS on April 9 also issued Revenue Procedure 2020-24, which describes how taxpayers with net operating losses (NOLs) arising in tax years 2018, 2019, or 2020 can (1) waive the carryback period in the case of an NOL arising in a tax year beginning after December 31, 2017, and before January 1, 2021, (2) disregard certain amounts of foreign income subject to Section 965(a) transition tax that normally would have been included as income during the five-year carryback period, and (3) waive a carryback period, reduce a carryback period, or revoke an election to waive a carryback period for a taxable year that began before January 1, 2018, and ended after December 31, 2017.

In addition, the IRS on April 9 issued Notice 2020-26, which grants a six-month extension of time to file a Form 1139 application for a tentative carryback adjustment under Section 6411 with respect to the carryback of an NOL that arose in any tax year that began during calendar year 2018 and that ended on or before June 30, 2019.

We are evaluating the guidance in Revenue Procedure 2020-24 and Notice 2020-26 and will provide our analysis of that guidance in the days to come. This Insight is our discussion of the extension relief provided in Notice 2020-23.

The takeaway

The IRS has provided much-needed additional filing and payment extension relief though July 15, as well as much-needed guidance on NOL carryback claims. The current situation is dynamic and constantly changing. We expect even more clarity, including the process for filing Forms 1139 and more detailed guidance on NOL and AMT interactions.

Contact us

Kevin Brown

Principal, Tax Controversy and Regulatory Services Leader, PwC US

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