Washington (May 28, 2002) -- The Internal Revenue Service will allow taxpayers until Oct. 31, 2002, to choose whether or not they want to use the new five-year carryback period for net operating losses (NOLs) made possible by the tax law enacted in March.
The new law made the extended carryback period effective for tax years ending in 2001 or 2002, but some taxpayers who filed returns before the law was passed would not have been able to use this provision.
The Congressional tax-writing committees advised the Treasury Department that this was not their intent and that they will pursue technical corrections legislation to let taxpayers take maximum advantage of the carryback period. The IRS decision reflects that clarification.
Taxpayers who incurred an NOL but either elected to forgo any carryback period or used a two-year period when they filed, may switch to the five-year period and claim a quick refund until Oct. 31, even though they would not usually have been able to do so. Those who want their return to remain as they filed it need not do anything. Taxpayers who neither elected to forgo the carryback period nor used a two-year period may choose to relinquish the five-year period and apply a two-year period.
-- Electronic Accountant Newswire staff
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