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Daily Tax Report: State

California Tax Relief Tied to Virus Doesn’t Apply to Income Tax

March 13, 2020, 9:46 PM

California Gov. Gavin Newsom’s order giving taxpayers an extra 60 days to file or pay taxes during the coronavirus pandemic appears to apply to sales tax filers but not personal or corporate income tax filers.

The Democratic governor, in a Thursday news conference, said his order gives taxpayers 60 more days to file their returns, but the order provides relief only to taxes administered by the California Department of Tax and Fee Administration. That department administers sales and use tax, and about 30 other special taxes and fees.

The Franchise Tax Board, which administers income tax, isn’t included in the measure providing the extra days. Administration and tax board officials declined to say whether the relief applies to income tax filing and payment deadlines. April 15 is the deadline for state personal income tax returns.

The tax department is part of Newsom’s administration, with an executive director appointed by the governor. The tax board is also part of the executive branch but is governed by a three-member board that includes the governor’s Department of Finance director, the chair of the elected State Board of Equalization, and the elected state controller.

Directives

The suspension of filing and payment deadlines for 60 days relieves taxpayers from interest and penalties if they can’t meet deadlines because of state or local public health orders related to the outbreak of the respiratory disease Covid-19.

The state’s sales tax department told Bloomberg Tax in an email that it will post instructions for taxpayers requesting relief on its website. Taxpayers can use existing tools for requesting relief online, by letter, or by phone at 1-800-400-7115, the department said.

The order also directs the sales tax department, the tax board, the Board of Equalization, and the Office of Tax Appeals to use their administrative powers where appropriate to provide extensions for filing, payment, audits, billing, notices, assessments, claims for refund, and from penalties and interest if state or local orders prevent them from filing.

It’s unclear whether the broad directive offers new tools for tax agencies to provide relief, Greg Turner, principal at Turner Law in Sacramento, said.

“If they have the existing authority to do any of those things when appropriate, this doesn’t do anything,” Turner said.

California has had 247 positive cases of coronavirus and five deaths as of Friday morning, up from 198 cases and four deaths on Thursday, according to the most recent update from the state Department of Public Health.

Newsom’s order also limits nonessential gatherings to no more than 250 people and asks people to observe “social distancing” of at least six feet.

Matching Federal Relief

One lawmaker is urging the tax board and the Employment Development Department, which administers payroll tax, to use existing authority to match federal government tax relief related to the coronavirus.

If the U.S. Treasury Department defers tax payments, relieves penalties and interest, or takes other measures, California should too, Assemblyman Phil Ting said in a Thursday letter to EDD and FTB leaders.

State tax authorities should provider even more relief than the federal government offers, if needed, he said.

“I know my colleagues and I stand ready to take swift legislative action to sustain our economy,” Ting said.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at lmahoney@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Sony Kassam at skassam1@bloombergtax.com

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