If your small business lost money in 2008, you may be able to get money back that you did not expect, but you will need to act soon. Under the American Recovery and Reinvestment Act (ARRA), enacted in February, small businesses that had a loss in 2008 can choose to carry the resulting loss back for up to five years, instead of the usual two. This means that an NOL in 2008 could be carried as far back as 2003, rather than the usual 2006. Not only could this mean a special tax refund, but it could be larger because the loss is being spread over as many as five tax years, rather than just two.
This carryback provision offers small businesses that lost money in 2008 an excellent way to quickly get needed cash if they were profitable in prior years. This option is only available for a limited time, so small businesses should consider it carefully and act before the deadline.
A calendar-year corporation that qualifies must file a claim by September 15, 2009. For individuals, the deadline is October 15, 2009. This includes a sole proprietor, an individual partner in a partnership and a shareholder in an S corporation. Deadlines vary for fiscal-year taxpayers, depending upon when their fiscal year ends and whether they are making the choice for the tax year that ends or begins in 2008.
Individuals and corporations can accelerate a refund by filing special forms and usually receive refunds within 45 days. If you would like more information, please contact me.
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