Delays in processing net operating loss (NOL) cases costs the IRS millions of dollars in interest a year, the Treasury Inspector General for Tax Administration has said.
An NOL is created when deductions exceed income, and it can be applied to prior year taxes or even carried forward in future years. If the IRS does not process an NOL case within 45 days however interest must be paid to the taxpayer and it’s costing the IRS money, TIGTA said.
After reviewing 86,483 NOL carryback tax abatements, TIGTA said almost 20 percent were not processed on time, representing about $334 million of avoidable interest payments and delayed payment to more than 74,000 accounts in the next five years.
Contributing to delays are case reassignments, incorrect priority codes, and a failure to issue manual refunds when required. TIGTA also said performance measures are not ensuring the timely processing of NOL cases, but noted that management is planning corrective actions.
