If your corporation experienced a loss or generated certain unused tax credits, you might be entitled to a quick refund from taxes you paid in previous years. Form 1139 is the IRS form that makes this expedited refund possible—and understanding how it works could mean faster cash flow when your business needs it most.

What Form 1139 Is For

Form 1139, Corporation Application for Tentative Refund, is a specialized IRS form that allows corporations (except S corporations) to apply for a quick tax refund by "carrying back" certain losses and credits to previous tax years when they paid taxes. IRS.gov

Think of it this way: if your corporation had a profitable year in 2019 and paid taxes, but then suffered a significant loss in 2021, you can use that 2021 loss to offset your 2019 income and get back some of the taxes you paid two years ago—without waiting through the normal lengthy refund process.

Specifically, Form 1139 can be used to claim refunds based on:

• Net Operating Loss (NOL) carryback – When your business deductions exceed your income for the year
• Net capital loss carryback – When your capital losses exceed capital gains
• Unused general business credit carryback – When you have tax credits you couldn't use in the current year
• Claim of right adjustment – When you had to repay income you previously reported under IRS Section 1341(b)(1)

The major advantage? The IRS is required to process Form 1139 applications within 90 days, compared to the much longer timeline for standard amended returns (Form 1120X). IRS Instructions for Form 1139, Rev. November 2021

When You’d Use It (Including Late/Amended Filing)

Standard Filing Timeline: You must file Form 1139 within 12 months of the end of the tax year in which your loss, unused credit, or overpayment occurred. For example, if your corporation's 2021 tax year ended December 31, 2021, you have until December 31, 2022, to file Form 1139.

Critical requirement: You must file your corporate income tax return for the loss year no later than the date you file Form 1139. You cannot file Form 1139 before filing your actual tax return. IRS Instructions for Form 1139

Extension Considerations: If you filed Form 1138 (Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback), you can get an additional extension by filing Form 1139 by the last day of the month that includes your extended return due date.

Late or Missed Deadlines: If you miss the 12-month window for Form 1139, don't panic—you still have options. You can file Form 1120X (Amended U.S. Corporation Income Tax Return) instead. The trade-off is that amended returns take much longer to process and have a different deadline: generally within 3 years after your original return's due date (or the date you actually filed, if later).

Important Note for 2021: For losses incurred in tax years beginning after December 31, 2020 (which includes most 2021 calendar-year returns), significant changes apply due to the repeal of the general NOL carryback. Only farming losses and losses from insurance companies (other than life insurance companies) can be carried back. All other NOLs can only be carried forward to future years. IRS Instructions for Form 1139

Key Rules or Details for 2021

No More General NOL Carryback

For tax years beginning after December 31, 2020, the CARES Act's generous 5-year NOL carryback provision expired. Most corporations can no longer carry back NOLs to previous years—they can only carry them forward indefinitely.

Important Exceptions for 2021

• Farming losses – Can be carried back 2 years
• Insurance company losses (non-life insurance) – Can be carried back 2 years

What Qualifies as a Farming Loss

It's the smaller of either (1) the NOL that would exist if you counted only farming business income and deductions, or (2) your total NOL. Farming businesses are defined under IRS Section 263A(e)(4). IRS Instructions for Form 1139

NOL Deduction Limitation

For tax years beginning after December 31, 2020, NOL deductions are limited to 80% of your taxable income (calculated without the NOL deduction, Section 199A deduction, or Section 250 deduction). This limitation doesn't apply to insurance companies other than life insurance companies.

Capital Loss Carryback

Net capital losses can generally be carried back 3 years and are treated as short-term capital losses in the carryback year.

General Business Credit Carryback

Unused general business credits can typically be carried back 1 year (unless Section 39(d) provides otherwise).

Waiving the Carryback

Corporations can elect to waive the entire carryback period and only carry losses forward. This election is irrevocable and must be made on your timely filed return for the loss year. IRS Instructions for Form 1139

Step-by-Step (High Level)

Step 1: Determine Eligibility

• Verify you have a qualifying loss or unused credit (for 2021, remember only farming losses and certain insurance losses qualify for NOL carryback)
• Calculate the amount you can carry back
• Identify which prior years will receive the carryback (typically 2 years back for qualified losses)

Step 2: File Your Tax Return First

• Complete and file your corporation's income tax return for the loss year
• Your tax return must be filed by the same date or before you file Form 1139—this is mandatory

Step 3: Gather Required Attachments

• First two pages of your corporation's income tax return for the loss year
• All schedules creating the carryback (e.g., Schedule D for capital losses, Form 3800 for general business credits)
• Any required election statements
• Refigured forms and schedules for each carryback year showing how the loss/credit affects prior year taxes
• Form 8302 for electronic deposit if any single carryback year refund exceeds $1 million
• All Forms 8886 (Reportable Transaction Disclosure Statement) if applicable

Step 4: Complete Form 1139

• Fill in corporate identification information
• Line 1: Identify the reason(s) for filing and amounts
• Lines 2-10: Provide details about the loss year and any special circumstances
• Lines 11-29: Calculate the decrease in tax for each carryback year using the three-column format (before carryback vs. after carryback for up to three prior years)

Step 5: Submit to the Correct IRS Service Center

• File Form 1139 separately—do NOT attach it to your tax return
• Mail to the same IRS Service Center where you file your regular corporate income tax return
• Keep a complete copy for your records

Step 6: Await Processing

• The IRS will process your application within 90 days
• The clock starts from whichever is later: the date you file a complete application, or the last day of the month that includes your tax return's due date (including extensions) IRS Instructions for Form 1139

Common Mistakes and How to Avoid Them

Mistake #1: Filing Form 1139 Before the Tax Return
Many corporations attempt to get the refund process started by filing Form 1139 before their actual tax return. This violates IRS rules and will result in delays or rejection. Always file your corporate income tax return first or simultaneously.

Mistake #2: Missing the 12-Month Deadline
Time flies, especially during busy tax seasons. Mark your calendar clearly: you have 12 months from the end of your loss year to file Form 1139. If you miss it, you'll need to use Form 1120X, which takes considerably longer to process.

Mistake #3: Attempting to Carry Back Non-Qualifying 2021 Losses
The biggest pitfall for 2021 is forgetting that regular business NOLs can no longer be carried back. Unless you have a farming loss or are a qualifying insurance company, don't waste time preparing Form 1139 for an NOL—you can only carry it forward.

Mistake #4: Incomplete Attachments
Form 1139 requires extensive supporting documentation. Missing attachments like refigured tax forms for carryback years or required schedules can cause the IRS to disallow your application entirely within the 90-day window, with no opportunity to correct it or sue. Create a checklist of all required attachments before mailing.

Mistake #5: Math Errors and Material Omissions
The IRS can disallow your application if there are material omissions or mathematical errors that aren't corrected within the 90-day processing period. Unlike regular tax returns where you might receive a notice asking for corrections, Form 1139 applications can be summarily rejected. Double and triple-check all calculations.

Mistake #6: Confusing Form 1139 with Form 1120X
These forms serve different purposes. Form 1139 is for tentative refunds with expedited 90-day processing but limited appeal rights. Form 1120X is for regular refunds with longer processing times but full appeal rights if the IRS disagrees. Choose the right tool for your situation.

Mistake #7: Forgetting About Consolidated Returns
If your corporation files consolidated returns or changed from separate to consolidated filing (or vice versa), special rules apply. Read the instructions carefully regarding qualified new members and common parent requirements. IRS Instructions for Form 1139

What Happens After You File

Immediate Processing: Once the IRS receives your Form 1139, the clock starts ticking on the 90-day processing window. Unlike standard amended returns that can take 6 months or more, the IRS prioritizes these applications.

IRS Review: During the 90-day period, the IRS examiner will:

• Verify all calculations and supporting documentation
• Confirm your eligibility for the carryback
• Check for any red flags or inconsistencies
• May contact you or your authorized representative for additional information

Possible Outcomes

1. Approval and Refund
If approved, you'll receive your refund—but this doesn't mean the IRS has fully accepted everything as correct. It's a tentative refund. The IRS explicitly reserves the right to later examine your return and determine if adjustments are needed. If they later find overstatements, negligence, or substantial understatements, they can:

• Assess penalties
• Charge interest on amounts erroneously refunded
• Bill you for the difference as if it were a math or clerical error IRS Instructions for Form 1139

2. Request for Additional Information
The IRS may need clarification or additional documentation. Respond promptly to avoid delays or potential disallowance. Having a designated representative (Form 2848, Power of Attorney) can streamline this communication.

3. Disallowance
If your application contains material omissions or uncorrected math errors, the IRS can disallow it entirely. Here's the catch: you cannot sue to challenge the disallowance of a Form 1139 application. Your only recourse is to file a regular claim for refund using Form 1120X, which then follows the standard refund claim procedures with full appeal rights. IRS Instructions for Form 1139

Refund Delivery: For refunds of $1 million or more per carryback year, you can request electronic deposit by submitting Form 8302. Smaller refunds are typically issued by check.

Keep Records: Maintain complete documentation of your Form 1139 application, all attachments, and correspondence with the IRS. These records may be crucial if the IRS later questions the tentative refund or if you need to defend your position.

FAQs

Q1: Can S corporations use Form 1139?

No. Form 1139 is only for C corporations. S corporations that need to carry back losses or credits must use different procedures since they're pass-through entities. IRS.gov

Q2: What if I carried back an NOL to a year when I had Section 965 repatriation income?

Special rules apply. If you carry back an NOL to a "section 965 year" (related to the 2017 Tax Cuts and Jobs Act transition tax), you're deemed to have made an election under Section 965(n). The IRS website has additional guidance on this complex situation. For some carrybacks to Section 965 years, you must use Form 1120X instead of Form 1139. IRS Instructions for Form 1139

Q3: Can I file Form 1139 electronically?

Generally, no. Form 1139 must be filed by paper and mailed to the appropriate IRS Service Center. However, during the COVID-19 pandemic, the IRS temporarily accepted faxed submissions to 844-249-6236 for eligible claims starting April 17, 2020. Check IRS.gov/Form1139 for current filing method updates.

Q4: What's the difference between a farming loss and a regular business loss for 2021?

A farming loss is calculated by looking at only the income and deductions attributable to farming businesses (as defined in Section 263A(e)(4)). If your corporation operates both farming and non-farming businesses, you'll need to separate the activities. Only the farming portion qualifies for carryback in 2021; the rest can only be carried forward. IRS Instructions for Form 1139

Q5: Can I file both Form 1139 and Form 1120X for the same tax year?

Generally, you choose one or the other. However, there are situations where Form 1120X is required even if you want the speed of Form 1139. For example, if you need to carry back a prior-year foreign tax credit released by an NOL, or if you're carrying back certain items to a Section 965 year, you must use Form 1120X. The instructions specify which situations require amended returns instead of Form 1139. IRS Instructions for Form 1139

Q6: What happens if my corporation dissolved before filing Form 1139?

Dissolved corporations can still file Form 1139. You'll need to indicate the dissolution date on Line 8 of the form. The refund procedures remain the same, though you'll need to ensure proper corporate authority exists to file and receive the refund.

Q7: How long should I wait before following up if I haven't heard from the IRS?

Wait until the full 90-day period has elapsed, counting from the later of your filing date or the last day of the month that includes your return's due date (with extensions). If the 90-day period has passed with no response, contact the IRS Service Center where you filed to check the status. Keep detailed records of your filing date and method of delivery (certified mail receipt, etc.).

Additional Resources:

• Official IRS Form 1139 Page: IRS.gov/Form1139
• Instructions for Form 1139 (Rev. November 2021): Available at IRS.gov
• Current Form 1139 (Rev. October 2018): Available at IRS.gov

Note: Tax laws change frequently. Always consult with a qualified tax professional or check IRS.gov for the most current information before filing Form 1139.