Daily Tax Report ®

IRS May Soon Provide Refund Clarity to Virus-Hit Businesses (1)

April 8, 2020, 8:45 PMUpdated: April 8, 2020, 10:01 PM

The IRS may soon offer businesses filing instructions for claiming refunds after it scaled back operations at a major processing center—a step that could bring clarity for those trying to take advantage of perks in the new virus relief law.

The agency said in a statement Wednesday that it was “exploring options” for taxpayers to claim refunds and asked them to await further instruction before using traditional processes. The announcement came two days after a local National Treasury Employees Union chapter announced on Facebook that several offices at the IRS campus in Ogden, Utah were shutting down, with only employees performing “mission-critical” duties continuing to report to work.

The forms businesses can use to claim the stimulus-related refunds would typically be mailed to and processed at that campus; it was the last major IRS facility to send most of its workers home.

The closure comes at a time when businesses are eager to get their hands on quick cash to help them stay afloat during the pandemic, which has forced many to close or lay off employees.

The latest relief package (Public Law 116-136), known as the CARES Act, attempts to help those taxpayers by allowing them to carry losses incurred in 2018, 2019, or 2020 back five years to get a refund. The new law also allows businesses to immediately access any outstanding alternative minimum tax credits.

Practitioners have been inundated with inquiries about the changes.

“I would say we’re getting calls, maybe six or seven times a day, or eight, about the refunds,” said Lisa Haffer, a CPA and tax partner at BDO USA LLP. But she said new loans available under the recently enacted law are a better way for businesses to get cash quickly rather than relying on refunds.

According to the Facebook post, the facilities in Ogden will stayed closed until further notice as a result of local “stay at home” orders. The IRS didn’t answer additional questions about Ogden operations.

Even prior to the scale-down at Ogden, the facility was having difficulty processing the refund claims because of staffing reductions enacted to protect employees from Covid-19, according to Sunita Lough, the deputy commissioner for services and enforcement at the IRS who spoke last week on an American Bar Association webcast.

At the time, she said that the IRS was aware companies need extra cash now more than ever but that the agency had to balance those needs with the safety of its workers.

Shamik Trivedi, senior manager in Grant Thornton LLP’s Washington National Tax Office, said he hoped the agency could find a solution to this problem, given that it publicly addressed some of the concerns it had even before the most recent operational changes. Expanding options for electronic filing could be one potential avenue, he said.

--With assistance from Lydia O’Neal

(Adds comment from BDO USA LLP tax partner in sixth paragraph. )

To contact the reporter on this story: Allyson Versprille in Washington at aversprille@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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