Many businesses are facing Net Operating Losses (NOL's) thus far in the year 2020. There were some significant changes in the CARES Act that did not receive much attention but still can be very helpful increasing cash flow by generating tax refunds with new extended carry back provisions. Contact us to see if we can help with your cash flow by recouping tax refunds.
Before the new CARES Act, the Tax Cuts and Jobs Act (TCJA) and other legislation severely constrained the ability to use NOL's to lower tax liabilities. TCJA restricted carrybacks of NOLs and limited carryforwards to 80% of taxable income.
However, after the CARES Act, corporations incurring tax losses during 2020 in the US can now elect to carryback NOLs as far back as 2015.
The cash refund savings can be as high as 35 percent when electing to apply 2020 NOL's to taxes paid during 2015, 2016, and 2017 (before tax reform). Since US federal tax rates were reduced after tax reform, the federal tax refund could be as high as 21 percent for 2018 and 2019. Companies that can optimize their tax NOL position can carryback losses for taxes paid in recent years. For all years, there are complicated provisions that could limit the savings from carryback losses.
We encourage you to take a few minutes to reach out to us and our partners: Request a No Obligation Review of Your Circumstances.
With over 20 years' experience in specialized tax incentives we have been able to help many business owners and their tax professionals apply the latest tax code developments.