In this article, Jim Gadwood discusses the implications of miscalculated net operating losses after a closed tax year. Action taken by the Internal Revenue Service depends on whether the mistake occurs in the refund year or before the refund year. Gadwood noted that there are time limits for assessments and when refunds can be claimed and there are specific regulations regarding carrybacks and carryovers. "Different rules apply to carryovers and carrybacks, and the rules vary depending on whether correcting a mistake increases or decreases taxable income in the closed year," Gadwood said.