Not a Lexis+ subscriber? Try it out for free.

Tax Law

What you need to know today about COVID-19 and California taxes

Not even state taxes are immune from the COVID-19 pandemic. Below is a quick checklist – as of the time of publication – of coronavirus-related items and concerns affecting California state taxes.

  • Concerned with an upcoming California tax return filing date? On March 12, 2020, Governor Newsom issued Executive Order N-25-20 which, among other items, delays the deadline for state tax filings by 60 days for individuals and businesses unable to timely file due to compliance with public health requirements related to COVID-19. The Franchise Tax Board (FTB) has posted “COVID-19 Frequently Asked Questions” on its website to further explain these delays. The Employment Development Department (EDD) has informed employers statewide that they may request up to a 60-day extension of time to file state payroll reports and/or deposit payroll taxes without penalty or interest. The request must be in writing and be received by the EDD within 60 days from the original delinquent date of the payment or return. Note, the EDD has limited in-person access to its offices, and Tax Offices are now by appointment only, but employers can call a representative during business hours. View the Office Locator and more information here.
  • Planning to attend a tax agency meeting? On March 17, 2020, Governor Newsom issued Executive Order N-29-20 (amending Executive Order N-25-20 in part), which allows local or state legislative bodies to hold meetings via teleconference and to make meetings accessible electronically without being in violation of the open meeting laws found in the Bagley-Keene Act or the Brown Act.
  • Have any other state tax concerns that you wish addressed as a result of COVID-19, such as an upcoming date regarding a pending administrative proceeding? Executive Order N-25-20 provides “The [FTB], the Board of Equalization [BOE], the Department of Tax and Fee Administration [CDTFA], and the Office of Tax Appeals [OTA] shall use their administrative powers where appropriate to provide those individuals and businesses impacted by complying with a state or local public health official’s imposition or recommendation of social distancing measures related to COVID-19 with the extensions for filing, payment, audits, billing, notices, assessments, claims for refund, and relief from subsequent penalties and interest.” The CDTFA already has spoken out on this new authority and has stated that this assistance includes granting extensions for filing returns and making payments, relief from interest and penalties, and filing a claim for refund. Taxpayers may request assistance by contacting the CDTFA.
  • Will anyone pick up the phone if you call one of the tax agencies? On March 18, 2020, the California Department of Human Resources directed state government personnel offices to establish a staff management plan that takes into consideration stay-at-home directives from state and local public health departments, and a telework schedule for all non-critical employees. This guidance applies to state employees at the FTB (income/franchise), the BOE (centrally-assessed property and misc. taxes), the CDTFA (sales/use and misc. taxes), the EDD (employment taxes), and the OTA (administrative appellate body) as state agencies.
  • Have a case pending at the OTA? For appeals that have a briefing or other deadline that falls between March 1, 2020, and May 18, 2020, an automatic 60-calendar day extension of the deadline will be granted. Oral and video hearings will continue to be held, but in-person hearings currently are discouraged.
  • What about city/local tax concerns? Cities are addressing concerns on an ad hoc basis. For example, Los Angeles County is not currently accepting in-person property tax payments because county buildings are closed at this time. As another example, the City of San Francisco is deferring quarterly business taxes for small businesses. Quarterly estimated tax payments of the Gross Receipts Tax, Payroll Expense Tax, Commercial Rents Tax, and Homelessness Gross Receipts Tax that would otherwise be due on April 30, 2020, are waived for taxpayers or combined groups that had combined San Francisco gross receipts in calendar year 2019 of $10 million or less. These quarterly estimated tax liabilities must instead be paid along with annual tax payments for tax year 2020, which will generally be due by March 1, 2021. The City of San Francisco is also extending the Annual Small Business License Fee, which is otherwise due on March 31, 2020, to June 30, 2020. The San Francisco Business Community is separately calling for an economic recovery package.
  • Watching a tax bill in the Legislature? The California Legislature announced on March 16, 2020, that it was adjourning until April 13. All legislation is now on hold, including bills to extend California’s False Claims Act to taxes and to impose a statewide headcount tax. Essentially, this is an acceleration of the beginning of the Legislature’s annual Spring Recess, which was already scheduled to begin on April 2, with the Legislature reconvening on April 13. The recess may extend beyond April 13 if the Governor declares that preventive measures such as continued home isolation are necessary to address the current state of emergency.
  • Have or watching a case in court? On March 16, the California Judicial Council announced that it continues to closely monitor the evolving COVID-19 coronavirus situation and share information with all courts. Courts have been advised to follow guidance provided by the Department of Public Health, and the federal Centers for Disease Control and Prevention to limit the spread of the virus. Any updates will be communicated through local court websites as appropriate. Other than this broad, statewide guidance, California courts are generally open for business, but on an ad hoc basis that changes from day-to-day. For example, on March 17, San Francisco County Superior Courts updated the information regarding a “drastic[]” reduction of operations, closing 75% of courtrooms and all clerks’ offices. All San Francisco civil trials set between March 17, 2020, and April 15, 2020, will be continued on a rolling basis for 90 days from the current trial date. Additionally, on March 16 the California Supreme Court issued an order suspending in-person oral arguments and setting all oral arguments at the Court’s San Francisco headquarters. Also on March 16, Los Angeles County Superior Courts announced they will “scale down operations” and close all non-essential functions from March 17 through March 19.