The Internal Revenue Service (IRS) today issued new guidance under the the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) for taxpayers with net operating losses (NOLs), and mortgage loans.

For NOLs, the IRS has posted a new set of FAQs that outline temporary procedures to fax IRS Form 1139 and Form 1045. The IRS explains that under the CARES Act:

• Section 2303 requires a taxpayer with a net operating loss arising in a 2018, 2019, or 2020 taxable year to carry that loss back to each of the five preceding years unless the taxpayer elects to waive or reduce the carryback; and
• Section 2305 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 permit a corporation to elect instead to recover 100 percent of any of its remaining minimum tax credits in its 2018 taxable year. 

Only claims allowed under sections 2303 and 2305 of the CARES Act that are made on Form 1139 or Form 1045 are eligible refund claims, the IRS explains. The agency's FAQs on this topic are posted here and include answers to the following questions:

1. How does the process change from the normal hard copy mailing requirement?
2. If I previously mailed in my Form 1139 or Form 1045, can I now fax it to these numbers?
3. Is there an order of priority in processing Form 1139 and Form 1045 under this temporary fax procedure?
4. What happens if a document faxed as instructed above is deemed an ineligible refund claim under this temporary fax procedure?
5. Section 2303 of the CARES Act amended section 172(b)(1) to provide for a carryback of any net operating loss (NOL) arising in a taxable year beginning after December 31, 2017, and before January 1, 2021, to each of the five taxable years preceding the taxable year in which the loss arises (carryback period). I am carrying back an NOL to a tax year in which I have a section 965(a) inclusion(section 965 year) and am now entitled to a refund for the section 965 year because my section 965 net tax liability is fully paid. May I use Form 1139 or Form 1045, as applicable, to apply for a refund for the section 965 year?
6. Will the IRS be establishing a similar procedure for Form 4466 "Corporation Application for Quick Refund of Overpayment of Estimated Tax"?
7. Will this temporary faxing process become permanent?

The IRS today also issued Revenue Procedure 2020-26, which provides a safe harbor for forebearance modifications to certain mortgages.

Under the guidance, such modified loans are "not treated as replacing the unmodified obligation with a newly issued obligation, as giving rise to prohibited transactions, or as manifesting a power to vary for purposes of determining the Federal income tax status of certain securitization vehicles that hold the loans," the IRS explains. A second safe harbor is provided "under which certain securitization vehicles are not treated as having improper knowledge of an anticipated default on the grounds that they acquired a mortgage loan with respect to which the borrower had participated in a forbearance program."

The 13-page text of Revenue Procedure 2020-26 is posted here.

Also today, the Treasury Department posted new guidance on the $150 billion relief fund created by the CARES Act for state, local and tribal governments. This guidance is posted here.

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