COVID-19: Relief at the State and Local Level

By April 10, 2020 May 19th, 2020 CARES Act
COVID-19: Relief at the State and Local Level

While much has been made about the federal tax adjustments and provisions to provide relief during the coronavirus pandemic, there has been considerable movement on the state and local level as well. Make sure you are up-to-date on the relevant deadlines and information pertaining to California and its local jurisdictions.

Overview

With the recent IRS extension of federal income tax filings and payments, the states have moved quickly to also extend their deadlines to July 15 or another specified deadline.

As of April 2, 2020, 38 states (including Washington D.C.) changed their filing and payment deadlines to July 15, 2020. These states include: Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Washington D.C., Delaware, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, North Carolina, North Dakota, Nebraska, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Wyoming and West Virginia.

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Similarly, 8 states have altered their filing and payment deadline, but to a date other than July 15. These states and their respective deadlines are as follows: Hawaii (July 20), Iowa (July 31), Idaho (June 15), Mississippi (May 15), New Hampshire (June 15), Oregon (April 30), Virginia (June 1), and Washington (June 15).

Puerto Rico postponed their filing and payment deadline to June 15, while the U.S. Virgin Islands postponed their deadlines to July 15.

For more detailed information on each state’s guidance, please refer to the AICPA’s state-by-state guide here.

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California Coronavirus SALT Tax Relief

1. Deadline Extension

In March 2020, the California Franchise Tax Board (FTB) announced an extension of the filing and payment deadline to July 15, 2020 for the following:

  • 2019 tax returns
  • 2019 tax return payments
  • 2020 1st and 2nd quarter estimated tax payments
  • 2020 LLC taxes and fees
  • 2020 Non-wage withholding payments

With the announcement, the FTB clarified that taxpayers also received automatic relief from interest and penalties.

For those taxpayers claiming the special COVID-19 relief, the FTB stated that they should write the name of the state of emergency (for example, COVID-19) in black ink at the top of the tax return. If a taxpayer choose to e-file their return, they should follow the software instructions to enter disaster information.

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2. Local Jurisdictions – Business/Individual Income Tax Relief

Similar to the states, some cities have provided guidance to taxpayers on local tax relief. Some notable cities are San Francisco and Oakland.

1. San Francisco

The city introduced a Gross Receipts Tax, Payroll Expense Tax, Commercial Rents Tax, and Homelessness Gross Receipts Tax Relief. Typically these taxes are due on April 30. However, the local government extended the due date for small businesses (taxpayers or combined groups with combined San Francisco gross receipts in 2019 of $10 million or less) to March 1, 2021. Businesses with San Francisco gross receipts exceeding $10 million appear to be subject to the non-extended deadlines.

San Francisco also introduced Business License Tax Relief. Under normal circumstances, the tax is due on March 31; however, given the current situation the local government extended the deadline to June 30, 2020.

2. Oakland

Oakland introduced Business Tax Relief. This includes a penalty waiver for small businesses for failure to file by March 20.

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3. California Department of Tax Fee Administration – Indirect Tax Relief

The California Department of Tax Fee Administration extended the deadlines for sales/use taxes, special taxes and fees such as fuel taxes, cannabis taxes, cigarette and tobacco taxes. However, these extensions are not automatic. Instead, the taxpayer may request an extension of up to 60 days for filings and payments through online services found here or through email. The extensions provide relief from interest and penalties.

It is important to note that on March 30, Governor Newsom extended the time frame up to 90 days after the due date of the return or payment for individuals and businesses filing a return for less than $1,000,000 in tax.

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4. California Employment Development Department – Payroll Tax Relief

The California Employment Development Department (EDD) extended the deadlines for filing state payroll reports and deposits of state payroll taxes. This relief, similar to above, is not automatic and requires a request from the taxpayer.

The taxpayer can request up to a 60-day extension to file state payroll reports and deposit state payroll taxes without penalty or interest. To take advantage of the relief, the EDD requires taxpayers to include the impact of COVID-19 in the taxpayer’s written request for an extension. The EDD must receive the extension request within 60 days from the original past due date of the payment or return.

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5. California Counties – Potential Limited Property Tax Relief

California establishes the property tax deadlines and has not extended these deadlines. As such, the counties do not have the ability to extend these deadlines.

For personal property taxes, the due date depends on the applicable county. For example, Los Angeles County has a due date of April 1, but a normal automatic extension to May 7.

Real property taxes are generally due on April 30. In our communication with several counties, including San Diego, Orange, Los Angeles and others, they explained that the respective real property tax due dates are still in effect. However, taxpayers can submit a Penalty Cancellation Request Form online starting on April 11.

Existing state law authorizes counties to waive penalties, costs and other charges when failure to make a timely payment stems from reasonable cause and circumstances beyond the taxpayer’s control, within certain conditions. Therefore, any taxpayer filling out the Penalty Cancellation Request Form must include applicable supporting documentation (e.g., hospitalization) for the requested penalty relief.

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How can Squar Milner help?

With new developments occurring on a near-daily basis, there is a lot of information to sift through to find the answers you need for you and your business. Even then, you need to make sure what you’re relying on is the most up-to-date and accurate. This is where we can help.

Our State and Local Tax (SALT) practice is working diligently to stay relevant on the changes happening at the state and local levels. We are here to answer your questions, guide you to the right information, and make sure you and your business are on the right track during these uncertain times.

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Disclaimer: This material has been prepared for informational purposes only, and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional tax planner or financial planner. All information is provided “as is,” with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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