What was a significant change in the treatment of NOLs under the CARES Act?

The significant change in the treatment of Net Operating Losses (NOLs) under the CARES Act is that NOLs can now be carried back to offset past taxable income. This provision allows businesses that experienced losses in tax years 2018, 2019, and 2020 to utilize those losses by applying them to previous tax years, effectively providing an immediate tax benefit by resulting in a tax refund.

This change aimed to provide much-needed relief to businesses during the economic downturn caused by the COVID-19 pandemic. Prior to the CARES Act, tax reform under the Tax Cuts and Jobs Act of 2017 had eliminated the ability to carry back NOLs, which meant that losses could only be carried forward to offset future taxable income. By reinstating the carryback option, the CARES Act helped generate liquidity for companies struggling during this challenging period, making it a crucial adjustment for many businesses.