What is the period for which NOLs can apply for refunds?

The ability to utilize Net Operating Losses (NOLs) for refunds is governed by the tax laws in place, specifically the rules established by the IRS. When it comes to carrying back NOLs to offset taxable income, businesses can generally apply these losses to tax returns from the previous two years. This means that if a company incurs an NOL, it can file amended returns for those two prior years to receive a refund of taxes paid based on the income from those years.

The relevance of this two-year carryback period is particularly significant for businesses looking for immediate financial relief. Under certain circumstances, particularly changes introduced by the CARES Act, NOLs can also be carried forward to offset future tax liabilities for an extended number of years, adding further flexibility for tax planning.

The other options, referencing periods of 1, 3, or 5 years, do not accurately reflect the established rules for the NOL refund period, which solidifies the two-year timeframe as the correct answer.