The IRS has added additional information, primarily related to C corporation taxpayers, to the FAQ on the temporary procedures for filing Forms 1045 and 1139.[1]

The IRS first addresses whether a similar procedure will be set up for handling the amended corporate return form, Form 1120X.  And the answer is simple—no.

8. Will the IRS be establishing a similar procedure for Form 1120X, Amended U.S. Corporation Income Tax Return?

No, the Form 1120X must be filed in accordance with existing form instructions. If a Form 1120X is faxed to the fax number noted above, it will not be accepted for processing.

Some taxpayers likely had a Form 1120X still under consideration by the IRS, or one they had mailed off before the Service Centers shut down.  As well, taxpayers may discover issues that will need fixing when preparing the Form 1139 that would require using a Form 1120X.  Those taxpayers are, essentially, out of luck until the IRS can start processing the paper Form 1120X.

9. What will happen if I filed a Form 1120X that has not been processed and I used those numbers in my Form 1139 filing?

Your Form 1139 must reflect your originally filed or previously processed amended return information.  If your Form 1139 does not match your IRS account, the Form 1139 cannot be processed because the Form 1120X needs to be processed first.  For example, if you gave a Form 1120X to your examination team, it has not been processed.

Do not attempt to file an amended return at time of filing Form1139. Amended returns will not be acted upon when filed with Form 1139 through the temporary fax procedures.

This problem will also get in the way of corporations who have changes to make to prior years due to items contained in the CARES Act, such as the fix for qualified investment property lives and qualification for bonus depreciation.  If those either increase a net operating loss or are the items that will generate a new net operating loss once they are taken into account, the business will not be able to take advantage of the fax option to file their Form 1139.

The FAQ goes on to deal with the issue of attempting to claim the accelerated access to unused corporate minimum tax credits.  While the law provides the credits can be claimed via the tentative refund procedures, the Form 1139 does not provide an option to claim a refund based on the credit.  The IRS deals with this as follows:

10. The current version of Form 1139 (2018) does not provide for tentative refunds for refundable prior year minimum tax credits.  How should I complete the Form 1139 if I am only claiming tentative refunds of prior year minimum tax credits?  How should I complete the 2018 Form 8827?

The following instructions apply for the 2018 Forms 1139 and 8827 to allow for the changes per CARES Act Section 2305(b).

Form 1139

• Include at the top of Form 1139, “Electing to Take 100% Refundable Credit Amount in 2018 - per CARES Act Section 2305(b)".

• You should complete Lines 1(d) and 29 of the Form 1139.  Leave Lines 1a through 1c and 2 through 28 blank.

• Enter on Line 1(d), the minimum tax credit carryforward to 2019, as reported on the original Form 8827 Line 9.  Disregard the instructions for Form 1139, Line 1(d) "Other".

• Enter on line 29, the difference between the amount reported on the original 2018 Form 8827 Line 8(c) and the amount reported on the revised 2018 Form 8827 Line 8(c) as described below.  Disregard the instructions for Form 1139, Line 29 "Overpayment of tax due to a claim of right adjustment under section 1341(b)(1)."

Form 8827

• Include at the top of 2018 Form 8827, “Electing to Take 100% Refundable Credit Amount in 2018 - per CARES Act Section 2305(b).”

• When completing Line 6 of the Worksheet for Calculating the Refundable Minimum Tax Credit Amount on 2018 Form 8827 replace "50%" in the instructions on Line 6 with "100%."

• Complete the remainder of 2018 Form 8827 according to the instructions.

11. Should I file the application for a tentative refund and claim both the NOL carryback and 100% refundable minimum tax credit on the same 2018 Form 1139 and how?

Yes, you should use the same Form 1139 for both claims.

• Complete Lines 1a through 1c and 2 through 28 as appropriate, following the existing Form 1139 instructions to report your NOL carryback.

• Enter on Line 1(d), the minimum tax credit carryforward to 2019, as reported on the original Form 8827 Line 9.  Disregard the instructions for Form 1139, Line 1(d) "Other".

• Enter on Line 29, the difference between the amount reported on the original 2018 Form 8827 Line 8(c) and the amount reported on the revised 2018 Form 8827 Line 8(c) as described below.  Disregard the instructions for Form 1139, Line 29 "Overpayment of tax due to a claim of right adjustment under section 1341(b)(1)."

Complete the 2018 Form 8827 as follows:

• Include at the top of 2018 Form 8827, “Electing to Take 100% Refundable Credit Amount in 2018 - per CARES Act Section 2305(b).”

• When completing Line 6 of the Worksheet for Calculating the Refundable Minimum Tax Credit Amount of the 2018 Form 8827 replace "50%" in the instructions on Line 6 with "100%."

• Complete the remainder of 2018 Form 8827 according to the instructions.

If you have a carryback of a net operating loss for the taxable year and are applying for a tentative carryback refund and a 100% refundable minimum tax credit tentative refund, ordering rules apply.  You must take into account any adjustments made in applying for the tentative carryback adjustment before determining the amount of the overpayment attributable to the 100% refundable minimum tax credit refund.  (Treas. Reg. § 5.6411-1).  Caution: adjustments to alternative minimum tax in the carryback years could affect the amount of the 100% refundable minimum tax credit allowed in 2018.

Finally, the FAQ adds a section on items to be included with a Form 1139 submitted via the fax program:

12. What documents should I attach to 2018 Form 1139 for a tentative refund for a 100% refundable minimum tax credit or the NOL carryback?

A. If you are only claiming a tentative refund for a net operating loss carryback, follow the existing instructions for Form 1139.

B. If you are only claiming a refund for the minimum tax credit, you should attach (1) the first three pages of the originally filed or previously processed amended 2018 Form 1120, including Schedule J, (2) a copy of the originally filed 2018 Form 8827, (3) the first three pages of the revised 2018 Form 1120, reflecting the change with the 100% refundable minimum tax credit, and (4) the revised 2018 Form 8827.

C. If you are claiming both a refund for the minimum tax credit and the NOL carryback, follow the existing instructions for Form 1139 for the NOL carryback and the instructions in (B) above for the 100% refundable minimum tax credit refund. Do not attempt to file an amended return at time of filing Form1139. Amended returns will not be acted upon when filed with Form 1139 through the temporary fax procedures.

[1] “Temporary procedures to fax certain Forms 1139 and 1045 due to COVID-19,” IRS Website, April 16, 2020 revision, https://www.irs.gov/newsroom/temporary-procedures-to-fax-certain-forms-1139-and-1045-due-to-covid-19, retrieved April 17, 2020