Tuesday, October 16, 2012
TIGTA: IRS's Failure to Timely Process NOL Claims Costs $334 Million/Year in Avoidable Interest Charges
Taxpayers who encounter significant financial losses could be in a situation where their deductions exceed their income, creating a net operating loss (NOL) that can be applied against prior year taxes. Interest is paid to the taxpayer if the IRS does not process an NOL case within 45 days. The IRS pays millions of dollars in interest payments annually because many NOL cases are not processed within 45 days. ... A test of a statistical sample of 334 of 86,483 NOL carryback tax abatements that posted to individual taxpayer accounts during Calendar Year 2010 showed 64 (19%) were not processed within 45 days. TIGTA estimates that the IRS could pay approximately $334 million of avoidable interest payments and delay payment to more than 74,000 individual taxpayer accounts in the next five years due to delays with processing NOL cases.