IRS Promises Quick Turnaround For Small Retailers Seeking 'Infusion Of Cash' From Stimulus Legislation

The Internal Revenue Service this week promised quick action for small retailers who take advantage of a provision in last month’s economic stimulus bill that makes them eligible for special tax refunds by counting current losses against profits from up to five years ago.
 
“The new net operating loss provisions could throw a lifeline to struggling businesses, providing them with a quick infusion of cash,” IRS Commissioner Douglas Shulman said on Monday. “We want to make it as easy as possible for small businesses to take advantage of these key tax benefits.”
 
The American Recovery and Reinvestment Act allows small retailers and other businesses with up to $15 million in annual gross receipts to “carry back” net operating losses from 2008 and 2009 and apply them against profitable years from as long as five years ago. The time period was extended from two years because some businesses haven’t seen a profit that recently.
 
Shulman said eligible companies will have until April 17 to file paperwork electing to choose the five-year period. Given the economic downturn, the IRS expects record numbers of companies to apply and will add staff if necessary in order to expedite applications as much as possible “during this difficult period.” Schulman said his agency hopes to deliver refund checks in as little as 45 days.
 
Updated forms and instructions have been posted on the IRS web site at www.irs.gov, or click here to read an IRS news release with direct links to the forms. Companies that don’t meet the deadline will still be eligible to carry losses back for two years.
 
NRF lobbied heavily for the five-year carryback provision earlier this year, and language approved by both the House and Senate originally would have applied to all businesses regardless of size. The provision was limited to companies with $15 million or less in gross receipts at the last minute, however, when the final version of the bill was passed February 13.
 
While the tax relief for small retailers is welcome, NRF is seeking legislation that would restore the provision to the stimulus bill’s original language and make all businesses eligible for the five-year period. President Obama included a proposal in his $3.6 trillion budget request last month that would appear to do so, though details have not yet been released. The Obama proposal would provide $35.7 billion in operating loss tax relief in 2010, up from the $4.7 billion provided in 2009 under the economic stimulus bill.
 
About a quarter of the money could go to retailers under the unrestricted version of the provision.