Tax Relief Related to Covid-19
Temporary Covid-19 Tax Relief Provisions
Federal and California tax authorities are offering extended deadlines for taxpayers during this time of uncertainty.
Here’s a summary of what we know now. We will continue to update information as it changes.
Federal Provisions announced March 20th
The treasury announced payment deferrals and later extended the 4/15 filing deadline to July 15th of 2020.
The payment deferrals will apply to estimated tax payments originally due on April 15th and any income tax payments due with a timely-filed tax return or extension.
According to the latest Notice-2020-18, released at 5 pm on 3/20 : "As a result of the postponement of the due date for filing Federal income tax returns and making Federal income tax payments from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the Federal income tax returns or to pay the Federal income taxes postponed by this notice."
Updated 3/18: We have just received additional details on how federal payment relief is to be applied. Read excerpts here.
Updated 3/20: We just received additional details on the extended filing deadline.
California Provisions announced March 13th
The California Franchise Tax Board (FTB) has extended payment and filing deadlines as follows (updated on 3/18 as shown in red):
- Partnerships and LLCs who are taxed as partnerships whose 2019 tax returns were due on March 16 were granted an extension to file and pay by July 15.
- Individual filers whose tax returns are due on April 15 now have a 90-day extension to file and pay by July 15.
- Quarterly estimated tax payments due on April 15 now have a 90-day extension to pay by July 15.
In addition, California extended payment and filing deadlines for all individuals and businesses to July 15th, 2020 for the following:
- 2020 1st and 2nd quarter estimated payments
- 2020 LLC taxes and fees
- 2020 Non-wage withholding payments
According to the announcement, the FTB will also waive interest and any late filing or late payment penalties that would otherwise apply.
This additional extension of time was made on 3/18/2020 in order to align with actions taken by the Federal Government.
Taking Advantage of CA Payment Relief
In order to claim relief, taxpayers will make a special notation on tax returns when they are filed. (This will be handled by our teams using our tax preparation software.)
The Covid-19 payment relief is similar to local relief for federally declared disasters that impacted our area. While interest and penalty abatement was offered, FTB systems continued to send penalty and interest notices to many who took advantage of this relief. As a result, additional correspondence was required for penalty and interest abatement.
Our Recommendation
We encourage those who are able, to continue to file their tax returns on time so that you are free to focus on 2020 priorities. We also suggest paying all California tax payments by the original due dates if reasonably possible, in order to avoid potential correspondence issues in the future.
Our team will be working remotely to ensure filing in compliance with original deadlines where possible, and to offer assistance to our customers as we all adapt to changes resulting from this temporary reality.