What Form 1139 Is For

Form 1139 is the IRS's fast-track refund application for corporations (excluding S corporations) that need to get money back quickly when certain tax situations arise. Think of it as an express lane for corporate refunds rather than waiting through the standard refund process, which can take much longer.

Corporations use this form in four specific situations. First, when they have a net operating loss (NOL)—essentially when business deductions exceed income for the year—they can "carry back" that loss to offset profits from previous years and recover taxes already paid. Second, when a corporation has a net capital loss from selling investments at a loss, it can similarly recover past taxes. Third, if the corporation couldn't use all of its general business credits (tax credits for activities like research, renewable energy, or hiring certain employees) in the current year, it can apply unused credits to prior years. Finally, corporations can use Form 1139 for a technical situation called a claim of right adjustment under section 1341(b)(1), which applies when a company had to repay income it reported in an earlier year.

The key advantage of Form 1139 is speed: the IRS commits to processing these applications within 90 days, whereas regular amended corporate returns can take six months or longer. This makes Form 1139 particularly valuable for corporations facing cash flow challenges that need refunds quickly. IRS.gov

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

Timing Is Crucial

Timing is crucial with Form 1139. Generally, corporations must file the form within 12 months after the end of the tax year in which the loss or unused credit occurred. For a calendar-year corporation with a 2013 loss, that means filing by December 31, 2014. Additionally, the corporation must have already filed its regular tax return for the loss year before submitting Form 1139—you cannot file them together.

Special Timing Rule With Form 1138

There's a special timing rule if you previously filed Form 1138 (Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback). In that case, you can get an additional extension by filing Form 1139 by the last day of the month that includes your return's due date (including any extensions) for the tax year when the NOL arose.

If You Miss the Deadline or Make a Mistake

What if you miss the deadline or make a mistake? If you can't meet the 12-month window or discover errors after filing Form 1139, you have an alternative: file Form 1120X (Amended U.S. Corporation Income Tax Return) instead. You generally have three years from the original return's due date (or the date you filed it, if later) to file Form 1120X. The trade-off is that Form 1120X doesn't have the guaranteed 90-day processing timeline and can take significantly longer. However, Form 1120X has advantages: if the IRS doesn't act within six months, you can file suit in court, and if the IRS disallows your claim, you have two years to challenge that decision in court—options you don't have with Form 1139.

Not a Formal Claim for Refund

Importantly, Form 1139 is not treated as a formal claim for credit or refund. If the application has material errors or omissions not corrected within 90 days, the IRS can disallow it entirely, and you cannot sue over that disallowance. Your remedy is filing the regular Form 1120X instead. IRS.gov

Key Rules or Details for 2013

Net Operating Loss (NOL) Carryback Periods

For the 2013 tax year, several important rules governed how losses and credits could be carried back.

Net Operating Loss (NOL) Carryback Periods: The standard carryback period for most NOLs was two years, meaning a 2013 loss could be carried back to 2011 and 2012. However, special extended carryback periods applied to specific loss types. Farming losses and certain disaster-related losses (including qualified Gulf Opportunity Zone losses from Hurricane Katrina-affected areas) could be carried back five years (to 2008). Specified liability losses—arising from product liability, environmental cleanup, nuclear decommissioning, or workers' compensation—could go back ten years (to 2003). For 2013, "eligible losses" from federally declared disasters for small businesses and farmers could be carried back three years.

Waiving the Carryback

Waiving the Carryback: Corporations could elect to forgo the carryback entirely and only carry losses forward, which might make sense if they expected higher tax rates in future years. This election had to be made on the timely-filed tax return (including extensions) for the loss year by attaching a statement. If you missed making this election, you had six months after the return's due date (excluding extensions) to file an amended return with the election, clearly marked "Filed pursuant to section 301.9100-2."

Net Capital Loss Rules

Net Capital Loss Rules: Capital losses could be carried back three years and were treated as short-term capital losses in those earlier years. However, the capital loss carryback couldn't increase or create an NOL in the year it was applied to—it could only offset capital gains.

General Business Credit (GBC) Carrybacks

General Business Credit (GBC) Carrybacks: Most unused general business credits could be carried back one year. However, 2013 saw special rules for eligible small business credits (ESBCs) under the Small Business Jobs Act, which could be carried back five years. ESBCs included most general business credits (except new hire retention and employer housing credits) for corporations with non-publicly-traded stock and average annual gross receipts not exceeding $50 million over the prior three years.

Important Calculation Adjustments

Important Calculation Adjustments: When computing the NOL for 2013, specific adjustments applied. The domestic production activities deduction under section 199 was generally not allowed in the calculation, and the NOL deduction itself (from other years) couldn't be used to figure the current year's NOL. IRS.gov

Step-by-Step (High Level)

Step 1: Prepare Your Loss Year Return

Step 1: Prepare Your Loss Year Return—File your corporation's complete 2013 income tax return (Form 1120 or applicable variant) first. Form 1139 cannot be filed until this return is submitted. Calculate your NOL, net capital loss, or unused credit carefully on the appropriate schedules.

Step 2: Identify Carryback Years

Step 2: Identify Carryback Years—Determine which prior years you'll carry the loss or credit back to, starting with the earliest year in the carryback period. For a standard two-year NOL from 2013, you'd start with 2011, then move to 2012 if any loss remains.

Step 3: Gather Required Attachments

Step 3: Gather Required Attachments—Collect copies of the first two pages of your 2013 corporate return, plus all schedules that generated the carryback (such as Schedule D for capital losses, Form 3800 for general business credits). Include any required election statements and all forms showing how you've refigured items for the carryback years.

Step 4: Complete Form 1139

Step 4: Complete Form 1139—Fill out the form's identification section completely. In Section 1, enter the amount and type of loss or credit you're carrying back. In the Computation of Decrease in Tax section (lines 11-27), use paired columns to show "before carryback" and "after carryback" figures for each year, starting with the earliest carryback year. Recalculate taxable income, regular income tax, alternative minimum tax, and all applicable credits for each carryback year.

Step 5: Sign and Submit Separately

Step 5: Sign and Submit Separately—Have an authorized corporate officer sign the form under penalty of perjury. File Form 1139 separately from your income tax return; send it to the same IRS Service Center where you file your regular return, but as a standalone submission. Keep copies of everything.

Step 6: Wait for Processing

Step 6: Wait for Processing—The IRS has 90 days from the later of (a) when you file the complete application, or (b) the last day of the month containing your 2013 return's due date (including extensions). IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Filing Form 1139 with the Tax Return

Mistake #1: Filing Form 1139 with the Tax Return—Many corporations mistakenly attach Form 1139 to their annual return. The instructions explicitly state to file it separately. Send it to the same Service Center, but as its own package, clearly labeled. Filing them together can delay processing significantly.

Mistake #2: Forgetting Required Attachments

Mistake #2: Forgetting Required Attachments—Applications frequently arrive incomplete, missing copies of the loss year return pages, carryback schedules, or refigured carryback year computations. An incomplete application can be disallowed outright. Use a checklist: first two pages of the loss year return, all relevant schedules generating the carryback, and detailed computations showing the refigured tax for each carryback year.

Mistake #3: Incorrectly Calculating the NOL

Mistake #3: Incorrectly Calculating the NOL—Remember the special adjustments when computing an NOL. Don't include NOL deductions from other years in your calculation, and generally exclude the section 199 domestic production activities deduction. Dividends-received deductions have special calculation rules that ignore certain limitations. Math errors here can result in disallowance.

Mistake #4: Missing the 12-Month Filing Window

Mistake #4: Missing the 12-Month Filing Window—The deadline sneaks up fast. Mark your calendar: Form 1139 must be filed within 12 months after the close of the loss year. For a calendar 2013 loss, that's December 31, 2014. Missing this means you'll need to file Form 1120X instead, losing the fast-track processing.

Mistake #5: Applying Losses to the Wrong Years or Wrong Order

Mistake #5: Applying Losses to the Wrong Years or Wrong Order—Carrybacks must be applied to the earliest year first, then moving forward chronologically. A 2013 two-year NOL carryback goes to 2011 first; any remaining amount then goes to 2012. You can't cherry-pick which years to apply losses to based on tax rates.

Mistake #6: Not Refiguring Alternative Minimum Tax

Mistake #6: Not Refiguring Alternative Minimum Tax—Many corporations forget that the AMT calculation for carryback years must also be refigured. Attach a completed Form 4626 for each carryback year showing the recalculated AMT.

Mistake #7: Failing to Address Consolidated Return Issues

Mistake #7: Failing to Address Consolidated Return Issues—If your corporation filed consolidated returns or joined a consolidated group during any carryback year, special rules apply regarding who receives the refund and how it's allocated. Line 5 specifically addresses this—don't skip it if it applies. IRS.gov

What Happens After You File

Processing Timeline

Processing Timeline: The IRS commits to acting on your Form 1139 within 90 days of the later of two dates: when you file a complete application, or the last day of the month containing your 2013 return's due date (including extensions). This is dramatically faster than the six months or more typical for amended returns.

Receiving the Refund

Receiving the Refund: If approved, you'll receive a refund check relatively quickly. For consolidated groups, refunds go to the common parent corporation, not to individual group members. If the refund for any single carryback year exceeds $1 million, you'll need to arrange for electronic deposit and attach Form 8302 for that year.

What “Approval” Really Means

What "Approval" Really Means: Here's a critical point many corporations misunderstand—receiving your refund does NOT mean the IRS agrees your application is correct. It's a tentative refund. The IRS can and does audit these applications later. If they subsequently determine your deductions or credits were overstated due to negligence, inflated property values, disregard of rules, or substantial income understatement, you'll face penalties plus interest on amounts erroneously refunded. The interest clock starts from when you received the refund.

Disallowance Scenarios

Disallowance Scenarios: The IRS can disallow your application entirely if it contains material omissions or mathematical errors that aren't corrected within the 90-day period. If this happens, you cannot sue over the disallowance. Your only recourse is filing Form 1120X as a formal claim for refund, which then follows different rules allowing court challenges.

Subsequent Examinations

Subsequent Examinations: Even after issuing a refund, the IRS may examine your application. They might contact you or your authorized representative for additional information. Having a Power of Attorney (Form 2848) attached to your original Form 1139 helps facilitate these communications.

Recordkeeping

Recordkeeping: Keep all documentation related to Form 1139 and the underlying loss or credit indefinitely, or at least as long as it may be relevant to any tax year's administration. The IRS can question these carrybacks years later during audits of other years. IRS.gov

FAQs

1. Can I file Form 1139 electronically?

No, Form 1139 cannot be e-filed as of the 2013 tax year. It must be mailed as a paper submission to your IRS Service Center. If you e-file your corporate return, you'll need to print, complete, and mail Form 1139 separately afterward.

2. What's the difference between Form 1139 and Form 1120X for claiming carryback refunds?

Form 1139 is the quick application (90-day processing guarantee) but offers no right to sue if disallowed and isn't technically a formal refund claim. Form 1120X is the standard amended return (slower processing, no time guarantee) but is a formal refund claim that gives you legal remedies if the IRS denies or delays it. Additionally, only Form 1120X can carry back certain released foreign tax credits.

3. Can I change my mind and carry an NOL forward instead of back after filing Form 1139?

Not easily. If you want to waive the carryback and only carry the loss forward, you need to make that election on your original timely-filed tax return for the loss year (or within six months after the due date on an amended return marked "Filed pursuant to section 301.9100-2"). Once made, this election is irrevocable. If you've already filed Form 1139 claiming a carryback, it's too late to change strategies.

4. My corporation had losses in multiple years—can I carry back multiple years' losses on one Form 1139?

No. File a separate Form 1139 for each tax year that generated a loss or unused credit. Each loss year needs its own application showing how that specific year's loss carries back to the appropriate prior years.

5. What happens if my 2013 NOL is bigger than the income from all the carryback years combined?

Any NOL that can't be absorbed during the carryback period (because there wasn't enough taxable income in those earlier years) automatically carries forward to future years—up to 20 years for most losses. You'll apply it against 2014, 2015, and subsequent years' income until it's fully used or expires.

6. Do S corporations use Form 1139?

No. Form 1139 specifically excludes S corporations. Because S corporations are pass-through entities (losses and income flow to shareholders), the individual shareholders deal with loss carrybacks on their personal returns using Form 1045 if applicable, not the corporation itself.

7. I'm carrying back a general business credit under the Small Business Jobs Act provisions—what should I write on the form?

If you're an eligible small business carrying back an eligible small business credit (ESBC) with the special five-year carryback, write "SBJA 2012" at the top of Form 1139. You'll also need to complete and attach Form 6478 (for alcohol fuel credits) or other applicable credit forms for each carryback year, following the detailed instructions in the Form 3800 instructions. IRS.gov

Source: This summary is based on the official IRS Instructions for Form 1139 (Rev. December 2012) and Form 1139 (Rev. December 2012), the authoritative versions applicable to the 2013 tax year, along with the IRS About Form 1139 overview page.