Instead of receiving the full tax refund to which it feels entitled under the CARES Act Genesco (GCO), a footwear, apparel, and accessories wholesaler and retailer, is now receiving added scrutiny from the IRS.

The CARES Act, passed during the pandemic, allows companies to carry back net operating losses (NOLs) and receive tax refunds. The 5-year carryback is for taxable years beginning in 2018, 2019 and 2020.

In FY22, Genesco received $26 of the $55 million tax refund requested. In lieu of the other half, Genesco received notification the IRS is now auditing the periods related to the outstanding net tax refund. Though it says it still expects to receive the full amount, Genesco did acknowledge in its latest quarterly report:

“While we do not believe any uncertainty with the technical merits of the positions generating the net tax refunds exists, we do anticipate the timing of the net tax refund will be extended as a result of the audit process.”

The outstanding portion of the refund has been moved to non-current prepaid income taxes on the balance sheet.

Genesco has generated losses in three of the last five years and has lost a total of $44 million during that time.