Tentative refunds on Form 1045 and Form 1139: the IRC 6411 application, the 12-month filing window, the 90-day processing rule and how a tentative allowance is clawed back

What a tentative refund application is

IRC 6411(a) lets a taxpayer “file an application for a tentative carryback adjustment of the tax for the prior taxable year affected by a net operating loss carryback provided in section 172(b), by a business credit carryback provided in section 39, or by a capital loss carryback provided in subsection (a)(1) or (c) of section 1212.” The IRS has 90 days to make “a limited examination of the application, to discover omissions and errors of computation therein,” and must then credit or refund the decrease in tax within that period.

The trade for speed is in the next clause. The IRS “may disallow, without further action, any application which he finds contains errors of computation which he deems cannot be corrected by him within such 90-day period or material omissions.” The IRM repeats the consequence in every section on the subject: “An application for a tentative refund is not treated as a claim for credit or refund.” Because it is not a claim, a rejected application cannot be litigated: “If the application is rejected in whole or in part, no suit challenging the rejection may be brought in any court.” And because it is paid on a limited review, the IRS can recover any excess later by a summary assessment rather than through deficiency procedures. The Form 1139 instructions put the point to corporations directly: “The payment of the requested refund does not mean the IRS has accepted the application as correct.”

Internally the IRS calls the application a TENT and a carryback claim on an amended return a RINT. Both are worked by Accounts Management's carryback teams unless the case meets the referral criteria described below.

Which carrybacks still exist

The Tax Cuts and Jobs Act eliminated most NOL carrybacks, and the CARES Act window (five-year carrybacks for losses arising in 2018, 2019 and 2020) has closed for tentative applications because of the 12-month filing limit. What remains for a current-year loss:

The IRM's summary: the TCJA “generally repealed the carryback periods for net operating losses incurred in tax years ending after December 31, 2017,” and “All other entity types can carry net operating losses forward only.” A nonfarm business loss on a 2025 return cannot be carried back. The Form 1045 example: of a $50,000 NOL, the $35,000 farming portion is carried back two years and “the remainder of the loss (nonfarm loss) isn't eligible for carryback and must be carried forward.” Three items cannot go on either form even when a carryback exists: anything carried to an IRC 965 year, a released prior-year foreign tax credit, and a general business credit released by that foreign tax credit. Those require an amended return.

Form 1045 versus Form 1139

On both forms, “The tax previously figured will be the tax shown on the return as filed, increased by any amounts assessed (or collected without assessment) as deficiencies before the date of the filing of the application for a tentative carryback adjustment, and decreased by any amounts abated, credited, refunded, or otherwise repaid prior to that date.” Carrying an NOL back may create alternative minimum tax in the gain year, so a revised Form 6251 for each gain year is part of the package. Both forms ask whether a Tax Court petition is pending for a gain year; if so, the IRS processes the application and notifies Appeals. New line 2c on the 2025 Form 1045 marks a resubmission in response to IRS correspondence, with only the requested items attached.

The 12-month window and what must be attached

The statute sets both ends of the filing window. The application must be filed “on or after the date of filing for the return for the taxable year of the net operating loss, net capital loss, or unused business credit from which the carryback results and within a period of 12 months after such taxable year.” So for a calendar 2025 loss, the loss-year return must be filed first and the application must be received by December 31, 2026. The IRM instructs employees to verify line 2b (the date the loss-year return was filed) and reject an application with a blank or future date. The return does not have to have posted; it has to have been filed.

The Form 1045 caution is blunt: “Do not file your 2025 Form 1045 before you file your 2025 income tax return.” And: “Don't include Form 1045 in the same envelope as your 2025 income tax return.” An application mailed with the return is a common reason for an unprocessable TENT.

Two refinements. A corporation that filed Form 1138 to defer the prior year's tax gets a further payment extension if it files Form 1139 by the last day of the month that includes the loss-year return due date with extensions. A qualified new member of a consolidated group that filed a short-period return may measure its 12 months from the end of the group's tax year. Disaster relief under IRC 7508A can also postpone the deadline.

The attachments make the application “complete.” For Form 1045: the loss-year Form 1040 with Schedules 1 through 3, A, D, F and J as applicable; Form 461; all Schedules K-1, K-2 and K-3 contributing to the carryback; any extension request; Forms 8886; Form 6251 for the loss year and original and revised for each gain year; allocation schedules for any filing status change; election statements; and the forms from which the carryback results. “Otherwise, your application may be delayed or disallowed.”

The 90-day rule and the 45-day interest rule

Two clocks run once a complete application is filed, and they start on different dates.

The 90-day processing period under IRC 6411(b) begins on the later of the date the complete application is filed or “the last day of the month in which falls the last date prescribed by law (including any extension of time granted the taxpayer) for filing the return for the taxable year of the net operating loss.” An application filed in March by an individual whose return was extended to October 15 does not start its 90 days until October 31. The IRM gives employees 70 days to input the adjustment, and is clear about the period's purpose: “The 90-day period does not allow the taxpayer any additional time, beyond the normal 12-month period, to perfect, modify or refile an application.”

The 45-day interest-free period is separate. No overpayment interest is paid if the refund issues within 45 days of the carryback date, generally the later of the application's received or processable date and the loss-year return's due date (without extensions) or processable date. Otherwise interest runs from “generally the loss year return due date” without regard to extensions, never from the gain year's due date. And “For underpayment interest purposes, the NOL credit is not available until the loss year return due date,” so a carryback cannot stop interest on a gain-year balance before then. See IRS interest rates by quarter.

What the IRS does with the application

1. Screening for processability. The carryback team checks the filing date against the 12 months, the loss-year return filing date on line 2b, the attachments, the math, and the account for freeze codes. If something is missing, the IRM says “it is critical that two telephone attempts be made to contact the taxpayer requesting the missing information be faxed,” documented in the case file, before the application is rejected. A representative listed on an attached Form 2848 is who gets those calls.
2. Adjustment and refund. The decrease is input as a TC 295 on each gain year, in blocking series 91 (without the original return) or 92 (with it), with the interest computation date and carryback date. The refund issues systemically or, for large amounts, by manual refund; refunds of $1 million or more go through the manual refund procedures in IRM 21.4.4.
3. Examination referral after payment. Unlike an amended return, a TENT with examination potential is paid first: “Process Form 1045 and Form 1139 and allow the refund(s) prior to routing TENTs with CAT-A criteria.” CAT-A criteria include Joint Committee cases (combined refunds of $2,000,000 or more for individuals and Form 1041 filers, $5,000,000 or more for C corporations), dollar thresholds redacted in the public IRM, open examination or litigation indicators on an affected year, and consolidated loss years whose gain years were filed under a different EIN.

A Joint Committee case is reported to the Joint Committee on Taxation after payment and reviewed by Examination; see LB&I examinations.

Rejection, excessive allowances and reassessment

Rejection. If the application cannot be perfected within the 90 days, or the 12 months have run and the application was not processable, it is rejected by letter (Letter 216C). There is no appeal. The IRM: “The taxpayer does not have appeal rights under law for any rejected or unprocessed tentative refund application.” The remedy is a claim: “the taxpayer must file a claim for credit or refund using Form 1040-X, Form 1041, or Form 1120-X on or before the period of limitations for credit or refund expires.” If amended returns for the gain years were already in the file, the IRM has the employee convert the case to RINT claims rather than make the taxpayer refile.

Excessive allowances. If the IRS later decides the tentative allowance was too large, IRC 6213(b)(3) lets it assess the excess “as if it were due to a mathematical or clerical error appearing on the return,” outside the deficiency procedures. The Form 1045 instructions warn that an excessive amount “may be assessed and billed to you as if it were due to a math or clerical error on the return,” and that if the deductions or credits were due to negligence, disregard of rules or a substantial understatement, accuracy-related penalties under IRC 6662 can follow with daily compounded interest. The IRM instruction to employees is to the same effect: “TENTs can be reassessed without Examination deficiency or erroneous refund procedures,” using TC 294 (or TC 298 on a statute-imminent year) with interest computed from the loss-year return due date. Unlike an ordinary math error notice, “Mathematical/Clerical Appeal Rights do not apply to the reassessment of TENTs.” The recourse is to pay and file a refund claim, or to contest a later notice of deficiency for the loss year.

Statute effects on both sides

• Assessment. Carrying a loss back reopens the gain year for the carryback. Under IRC 6501(h), a deficiency attributable to an NOL or capital loss carryback “may be assessed at any time before the expiration of the period within which a deficiency for the taxable year of the net operating loss or net capital loss which results in such carryback may be assessed.” Under 6501(k), when an amount has been refunded under section 6411, the gain year's assessment period is extended to the loss year's period for any deficiency up to the amount tentatively refunded, even if the deficiency is unrelated to the carryback. A tentative refund therefore gives the IRS the loss year's statute to assess the gain year, up to the refund amount, on any issue. See the assessment statute.
• Refund claims. IRC 6511(d)(2) gives a carryback claim its own period: three years after the time prescribed for filing the loss-year return, including extensions, instead of the gain year's three years. The IRM: “The three-year period runs from the extended return due date regardless of when the return is actually filed.” This is an additional period, not a substitute for the gain year's own 6511(a) period, and the amount recoverable may exceed the normal lookback to the extent of the overpayment attributable to the carryback. It also means a tentative application rejected on day 364 can still be refiled as a claim.

Application or amended return

The choice is speed and summary recovery against finality and appeal rights.

For a clean farming loss or corporate capital loss, the application is faster. Where the computation is contestable or the gain years have open issues, the amended return preserves Appeals and suit rights, and the two are not exclusive: a timely claim can follow a rejected or reassessed application while the 6511(d)(2) period is open. See refund suits and claims.

Questions practitioners ask