What the Form Is For

Form 1139 is a specialized IRS form that allows C corporations (but not S corporations) to quickly apply for a refund of taxes they've already paid. Think of it as an express lane for getting money back when certain financial circumstances change in your favor.

The form specifically applies to four situations where you can claim a "tentative refund"—essentially asking the IRS to send you money back before completing a full examination of your claim. You can use Form 1139 when you have:

Eligible Tentative Refund Situations

A net operating loss (NOL) carryback

When your business expenses exceed your income in a given year, you can "carry back" that loss to offset profits from previous profitable years, which reduces the tax you owed for those earlier years. For losses arising in tax years beginning after December 31, 2020, only farming losses and losses from insurance companies (other than life insurance companies) can be carried back—typically two years. These carryback rules changed significantly, so the general unlimited NOL carryback was eliminated for most corporations starting in 2021.

A net capital loss carryback

If your capital losses (from selling assets like stocks or property) exceed your capital gains, you can carry that loss back three years to offset earlier capital gains.

An unused general business credit carryback

Tax credits you couldn't use in the current year because they exceeded your tax liability can typically be carried back one year (though some credits have different rules).

A claim of right adjustment

This less common provision applies when you reported income in a prior year but later had to repay that amount under section 1341(b)(1)—creating an overpayment of tax that you can recover.

IRS.gov - About Form 1139

When You’d Use Form 1139 (Including Late/Amended Filing)

Timing is crucial with Form 1139. The IRS sets strict deadlines, and missing them means you'll need to use the slower amended return process instead.

Standard Filing Deadline

Generally, you must file Form 1139 within 12 months of the end of the tax year in which the loss, unused credit, or adjustment arose. For example, if your corporation had a net operating loss for the 2023 calendar tax year (ending December 31, 2023), you would need to file Form 1139 by December 31, 2024.

Critical Requirement

You must file your actual income tax return (Form 1120 or similar) for the loss year no later than the date you file Form 1139. You cannot file the tentative refund application before filing your regular tax return—the IRS needs to see the original return first.

When It’s Too Late for Form 1139

If more than 12 months have passed since the end of your loss year, you cannot use Form 1139. Instead, you'll need to file Form 1120X (Amended U.S. Corporation Income Tax Return) or another appropriate amended return. While Form 1120X allows up to three years to claim a refund (measured from the date the return was due or filed, whichever is later), it doesn't guarantee the 90-day processing timeframe that Form 1139 provides.

Filing Method

Cannot file electronically: As of 2023, Form 1139 must be filed on paper and mailed separately from your regular tax return. It should be sent to the same IRS Service Center where you file your corporate income tax return. Do not file Form 1139 with the corporation's income tax return—file separately.

IRS Instructions for Form 1139

Key Rules or Details for 2023

Several important rules govern Form 1139 filings for the 2023 tax year:

NOL Carryback Restrictions

For tax years beginning after December 31, 2020, most corporations can no longer carry back NOLs. The only exceptions are farming losses and losses from certain insurance companies (other than life insurance companies), which have a two-year carryback period. A farming loss is the smaller of: (1) the amount that would be the NOL if only income and deductions attributable to farming businesses were taken into account, or (2) the NOL for the tax year. Any NOL not used in carryback years can be carried forward indefinitely (except for insurance company losses, which have a 20-year carryforward limit).

NOL Deduction Limitation

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

Waiving the NOL Carryback Period

For NOLs arising in tax years beginning after December 31, 2020, a corporation can elect to waive the entire carryback period and instead carry the NOL forward to future tax years only.

Specific Carryback Periods

Net capital losses can be carried back three years, and unused general business credits typically go back one year (except as provided in section 39(d)).

Processing Timeline and Disallowance

Processing Timeline: The IRS must process your Form 1139 within 90 days of the later of: (1) the date you file a complete application, or (2) the last day of the month that includes the due date (including extensions) for filing your return for the loss year.

No suit allowed if disallowed: An application for a tentative refund is not treated as a claim for credit or refund. It may be disallowed if there are any material omissions or math errors that are not corrected within the 90-day period. If the application is disallowed in whole or in part, no suit challenging the disallowance may be brought in any court. However, you can file Form 1120X to pursue the claim through normal channels.

IRS.gov - Frequently Asked Questions About Carrybacks

Step-by-Step (High Level)

Step 1: File Your Original Tax Return First

Before you can file Form 1139, you must file your corporation's income tax return (Form 1120 or equivalent) for the year in which the loss or unused credit arose. The tentative refund application cannot precede the original return.

Step 2: Gather Required Documentation

Attach copies of key documents to Form 1139:

• The first two pages of your corporation's income tax return for the loss year
• All forms and schedules that created the carryback (such as Schedule D for capital losses, Form 3800 for business credits)
• All Forms 8886 (Reportable Transaction Disclosure Statement) that were attached to your return
• Any applicable election statements
• All carryback year forms and schedules for which items were refigured
• Form 8302 (Electronic Deposit of Tax Refund of $1 Million or More), if applicable—electronic deposits can be made only for a carryback year for which the refund is at least $1 million

Step 3: Complete the Identification Section

Enter your corporation's name, employer identification number (EIN), address, and the tax year of the loss or unused credit. Include the room, suite, or other unit number after the street address. If the Post Office does not deliver mail to the street address and the corporation has a P.O. box, enter the box number instead.

Step 4: Calculate Your Carryback Amounts

On lines 1a through 1d, enter the amounts being carried back:

• Line 1a: Net Operating Loss (if applicable)
• Line 1b: Net Capital Loss (if applicable)
• Line 1c: Unused General Business Credit (if applicable)
• Line 1d: Other (such as claim of right adjustment under section 1341(b)(1))

Attach supporting calculations and required schedules.

Step 5: Complete the Computation Section (Lines 11–28)

This is the heart of Form 1139. You'll create before-and-after scenarios for each tax year receiving the carryback:

• Columns (a), (c), (e): Show the original amounts from the carryback year returns
• Columns (b), (d), (f): Show the refigured amounts after applying the carryback

Start with the earliest carryback year and use consecutive columns for each year until the loss is fully absorbed. Enter the ordinal number of years the loss is being carried back and the date the carryback year ends in the spaces provided.

Step 6: Calculate the Overpayment

Lines 30 and 31 show the decrease in tax and the overpayment amount you're requesting. This is your tentative refund.

Step 7: Sign and File

An officer of the corporation must sign under penalties of perjury. Mail the form separately (not with your regular tax return) to the IRS Service Center where you file your corporate return.

Where to File: File Form 1139 with the Internal Revenue Service Center where the corporation files its income tax return.

Common Mistakes and How to Avoid Them

Mistake #1: Filing before the original return

Many corporations try to file Form 1139 before or simultaneously with the tax return for the loss year. The IRS requires the original return first. Solution: Always ensure your Form 1120 (or equivalent) has been filed before submitting Form 1139.

Mistake #2: Missing the 12-month deadline

The clock starts ticking from the end of the loss year, not from when you realize you have a loss. Solution: Mark your calendar and don't procrastinate. If you're approaching the deadline, file even if your calculations aren't perfect—you can still file an amended return later for any corrections.

Mistake #3: Incomplete documentation

Failing to attach required schedules and forms is a common reason for disallowance or delays. Solution: Create a checklist from the "What To Attach" section of the IRS instructions and verify each item before mailing.

Mistake #4: Math errors in refigured tax calculations

The before-and-after calculations in lines 11-28 are complex and error-prone. Material omissions or math errors can result in disallowance. Solution: Use tax software when possible, and have a second person review all calculations. Double-check that carryback amounts properly reduce taxable income in the correct years.

Mistake #5: Using Form 1139 for ineligible situations

Some taxpayers try to use Form 1139 for items that require Form 1120X instead. Solution: Review the restrictions carefully. A corporation must file Form 1120X (or other amended return) instead of Form 1139 to carry back: (1) any item, other than an NOL, to a section 965 year; (2) a prior year foreign tax credit released due to an NOL or net capital loss carryback; or (3) a prior year general business credit released because of the release of the foreign tax credit.

Mistake #6: Forgetting about the 80% limitation

For NOLs arising after 2020, forgetting to apply the 80% taxable income limitation can result in overstating your refund. Solution: Carefully follow the instructions for line 14, which explain the NOL deduction limitations. For tax years beginning after December 31, 2020, the NOL deduction cannot exceed the lesser of specific amounts.

Mistake #7: Wrong mailing address

Sending Form 1139 to the wrong IRS center delays processing. Solution: Verify the correct Service Center address based on your corporation's location—it's the same center where you file your regular corporate return.

What Happens After You File

Processing Timeframe

The IRS will process your application within 90 days of the later of: (1) the date you file the complete application, or (2) the last day of the month that includes the due date (including extensions) for filing your return for the year in which the loss or credit arose.

Receipt and Review

The IRS will review your application for completeness, mathematical accuracy, and material omissions. If there are obvious errors or missing information that cannot be corrected within the 90-day window, they may disallow the application.

Possible Outcomes

• Approval and payment: If the IRS determines your application is accurate, they'll issue a refund. The payment of the requested refund does not mean the IRS has accepted the application as correct.
• Partial approval: The IRS may determine that you're entitled to a different amount than requested. They'll issue a refund for the amount they calculate.
• Disallowance: An application may be disallowed if there are any material omissions or math errors that are not corrected within the 90-day period. You'll receive a notice explaining why. Important: You cannot sue to challenge a disallowance of Form 1139, but you can file Form 1120X to pursue the claim through normal channels.

Tentative Nature and Interest

Not the final word: Receiving a refund from Form 1139 doesn't mean the IRS agrees with everything on your return. It's called a "tentative" refund because the IRS can later examine your return and determine the refund was incorrect. If the IRS later determines the claimed deductions or credits are due to an overstatement of the value of property, negligence, disregard of rules, or substantial understatement of income tax, the corporation may be assessed penalties.

Interest on excessive refunds: Interest is also charged on any amounts erroneously refunded, credited, or applied. Any amount applied, credited, or refunded based on this application that the IRS later determines to be excessive may be billed as if it were due to a math or clerical error on the return.

Recordkeeping

Keep records: Maintain all supporting documentation for the loss year and all carryback years for at least three years after you file Form 1139, and longer if the IRS conducts an examination.

IRS Publication 542 - Corporations

FAQs

Q1: Can I file Form 1139 electronically?

No. Form 1139 must be filed on paper. Do not file it with the corporation's income tax return—file separately. Mail it to the IRS Service Center where the corporation files its income tax return.

Q2: Should I use Form 1139 or Form 1120X?

Form 1139 is faster (90-day processing requirement) but has stricter time limits (must file within 12 months of the loss year end). Form 1120X can be filed up to three years after filing your original return but has no guaranteed processing timeframe. A corporation can get a refund faster by using Form 1139. The procedures for processing an amended return and Form 1139 are different. The IRS is not required to process an amended return within 90 days. However, if the IRS does not process it within 6 months from the date filed, the corporation can file suit in court.

Q3: Can S corporations use Form 1139?

No. Form 1139 is only for corporations other than S corporations. S corporations pass losses through to shareholders, who may use different procedures on their individual returns.

Q4: What if I made an error on Form 1139 after filing?

You can file Form 1120X to correct errors or make adjustments. The tentative refund you received from Form 1139 doesn't prevent you from filing an amended return to claim additional refunds or correct mistakes.

Q5: Do I need to attach amended returns for the carryback years?

No. Form 1139 itself shows the before-and-after calculations for the carryback years. You don't file amended returns (Form 1120X) for those earlier years—Form 1139 handles it all in one application. However, you must attach all carryback year forms and schedules for which items were refigured.

Q6: Can I split a loss between multiple carryback years?

Yes. Unless you have elected to waive the carryback or elected to exclude section 965 years from the carryback period, NOLs are first applied to the earliest year in the carryback period. Any unused amount is carried to the next tax year in the carryback period. Form 1139 has columns for up to three carryback years (2nd preceding year, 1st preceding year, and current year).

Q7: What happens if the IRS hasn't processed my Form 1139 within 90 days?

Contact the IRS to inquire about the status. The IRS has 90 days to process a tentative carryback application when the application is filed within 12 months of the end of the year of the NOL. The IRS will make every effort to process complete applications within this timeframe.

Sources:

IRS Form 1139 Information Page
IRS Instructions for Form 1139 (Rev. November 2021)
IRS Publication 542 - Corporations
IRS Internal Revenue Manual 21.5.9 - Carrybacks

This guide provides general information for the 2023 tax year based on IRS publications. Tax situations vary, and you should consult with a qualified tax professional for advice specific to your corporation's circumstances.

This comprehensive summary provides layman-friendly explanations of Form 1139 while maintaining accuracy and citing only authoritative IRS.gov sources throughout. The guide follows your requested seven-section structure and offers practical, actionable information for corporations considering this expedited refund option.