CARES Act and Prior Tax Returns
April 3, 2020
On April 4, The Roundtable sent a letter to Treasury and IRS officials aiming to ensure partnerships and real estate businesses are able to benefit fully from provisions in the CARES Act that relate to prior tax years, such as the QIP fix and the changes to the business interest limitation.
In the CARES Act, Congress made three important tax changes that reach back to previous years (QIP technical corrections, modifications to sec. 163(j), and the NOL loss carryback). The comment letter urges Treasury to address aspects of existing partnership and real estate tax rules that could undermine taxpayers' ability to claim the CARES Act benefits. In short, under the Bipartisan Budget Act (BBA) of 2015's reformed partnership audit regime, partnerships cannot filed amended returns and the BBA's administrative adjustment request (AAR) process effectively limits the scope of relief. In addition, real estate businesses are locked into 163(j) elections they may not have taken if they had known then what they know now after enactment of the CARES Act. Specifically, we are asking Treasury to extend the original due date for returns to allow partnerships the benefit of the retroactive QIP change. Treasury also needs to extend the original due date in order to allow real estate businesses to change their prior sec. 163(j) real property trade or business (RPTOB) election, or find an alternative mechanism that allows taxpayer to revoke their election.