Patience is a Virtue – Stimulus Bill and Operating Losses

by | Mar 26, 2020

News flash for companies with 2019 operating losses. The US Senate just passed a $2 trillion stimulus bill, known as the CARES Act, (the bill) by a 96-0 vote. We expect the House to pass the bill. While we are just learning about its provisions, we want to alert some 2019 tax return filers to hold off filing for a few days.

The bill is reported to provide for a five year net operating loss carryback, allowing some businesses to obtain a refund of taxes paid in prior years. The refund will be calculated at the rates in effect during the carryback years, that are higher than those in effect for 2018 – 2020. The bill applies to losses incurred during 2018, 2019 and 2020. For 2020 losses, businesses will have to wait until the current tax year finishes, to claim the carrybacks. Typically this will mean a refund to be received in 2021. However a net operating loss on a 2019 tax return could be carried back and applied to provide refunds from taxes paid in 2014 through 2018, providing for cash refund as soon as the 2019 business tax return is processed. 

Businesses that have losses and have yet to file their 2019 tax returns may want to wait a few days before filing. It could save the time and delay from having to file an amendment.

Should you have any questions regarding this possible change to the tax law, please contact Harden Law.


At the date of publication the above information was correct. It is quite possible the information above has changed as COVID-19 is a rapidly evolving situation. 

The article in this publication has been prepared for informational purposes only and should not be considered legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney/client relationship.