The IRS updated sections of the Internal Revenue Manual (IRM)* specifically addressing the treatment of net operating losses (NOLs) in light of legislative changes made by the “Coronavirus Aid, Relief, and Economic Security Act of 2020” (CARES Act) (Pub. L. No. 116-136).
The IRM update also addresses the election under section 53(e)(5) as amended by the CARES Act to utilize 100% of minimum tax credits (MTCs) for the first tax year beginning in 2018.
*The IRM is an official compendium of internal guidelines for IRS personnel.
Read the IRM update [PDF 208 KB] (dated May 6, 2020, and redacted in part) that reflects the following new IRM sections.
The new IRM sections contain specific guidance for processing Form 1139 or Form 1045 with NOLs, section 965 inclusions, and 100% refund of MTCs filed under provisions of the CARES Act.
As noted in the IRM update, beginning April 17, 2020, the IRS implemented a temporary EFAX process so that taxpayers receive refunds filed on Form 1139 or Form 1045 during the timeframe IRS Service Centers are closed due to COVID-19. The IRM update indicates the temporary EFAX process to receive Forms 1139 and 1045 will continue to be operational until further notice. Read TaxNewsFlash for more information on the EFAX process.
The IRM update also revises IRM sections that reflect different numbering from the online version of the IRM and includes references to what appear to be new IRM sections, suggesting that more interim guidance on CARES Act claims may be in the works.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.