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California Giving Smaller Businesses More Time to File Taxes (4)

March 31, 2020, 5:00 PMUpdated: March 31, 2020, 10:28 PM

As the Covid-19 crisis shows no signs of letting up, California has businesses longer to file returns and make payments, North Carolina is waiving more late-filing penalties, and Ohio is redirecting some of its liquor taxes to saving jobs. Here’s the latest on shifting state tax guidelines, deadlines, and policy to deal with the new coronavirus pandemic. For our Monday coverage click here. Here’s a state-by-state roadmap.

Businesses that owe California less than $1 million in quarterly sales and use tax have until July 31 to file returns and pay tax for the first quarter of 2020 under an executive order from Gov. Gavin Newsom (D).

The order goes further than one Newsom issued March 12; the previous order extended sales tax filing deadlines to May 11 but still required taxpayers to request an extension and show cause.

Now the governor has allowed the Department of Tax and Fee Administration to suspend the requirement that taxpayers request an extension with a statement made under penalty of perjury before granting relief, the department director Nick Maduros said Tuesday. The blanket extension applies to 99.5% of sales taxpayers in the state without a requirement that they each make a request for relief.

“We want to make it as easy as possible for taxpayers,” Maduros told Bloomberg Tax.

The extension to July 31 applies to first quarter sales and use tax returns and payments normally due April 30, and to second quarter pre-payments due in May and June.

Newsom’s order also extends by 60 days the deadlines to file refund claims with the sales tax department or to file an appeal of a department assessment with the Office of Tax Appeals. Those extensions are in effect through July 31.

Maduros said the department has also put most collections and audit activities on hold but is prioritizing audits that include refunds to taxpayers.

The department administers California’s sales and use tax, and more than 30 other special taxes and fees.

Illinois Extends E-Number Application Deadlines

The Illinois Department of Revenue has issued an order extending the deadlines for businesses to apply for sales tax exemption numbers.

Because of staffing issues created by the pandemic, the department said it is “unable to process most renewal applications for Illinois Sales Tax exemption (“E”) numbers at this time.”

The department also said it was permitting taxpayers to use their existing numbers for 90 additional days, “to allow time to process outstanding renewal applications.”

Indiana Relaxes Tax Audit, Debt-Collection Policies

The Indiana Department of Revenue, which has spent years working to increase the speed and efficiency of its tax-protest and auditing processes, is pausing or delaying many of these procedures as a result of the health crisis.

The department said it has suspended all in-person field audit work, isn’t holding any in-person tax protest hearings, and is extending tax protest windows by 60 days in an effort to help businesses struggling during the contagion.

“Our team has been aggressively looking for ways to implement flexibility across all service functions while preserving revenue collection operations, which are vital to funding state services provided to Hoosiers—all with the goal of helping our fellow Hoosiers,” Indiana Department of Revenue Commissioner Bob Grennes said in a statement.

The department also is cutting back on debt collection, including not pursuing debt-collection auctions, not engaging in new garnishments, offering back-tax payment plans up to 60-months long, and not terminating current payment plans if taxpayers miss payments.

New York City Delays Tax Lien Sale

The New York City Finance Department will postpone its annual tax lien sale to late summer, Mayor Bill de Blasio (D) announced Tuesday.

The step will allow more time for property owners facing the impact of the pandemic to resolve their debts. The delay had been urged by City Council Speaker Corey Johnson (D) and Council Finance Committee Chair Daniel Dromm (D), who warned against conducting the sale in the middle of a public health emergency.

“The coronavirus outbreak has significantly disrupted life for all New Yorkers, and it has put serious financial pressures on thousands of people across the city,” Jacques Jiha, the city finance commissioner, said in a statement. “Our job in government is to assist and provide relief during a crisis—not to cause further harm—which is why the Department of Finance will postpone the lien sale until later this summer and at that point, reassess the best way to proceed.”

Debtors this year had until May 14 to pay overdue city property tax, or water and sewer charges, or enter into a payment agreement plan, to avoid the tax lien sale. In the annual auction, the department sells off the debt to a nonprofit trust for collection.

More than 80% of owners pay the full amount owed, enter into payment plans, or obtain an exemption that removes them from the at-risk pool, the department said. Outreach efforts often involve partnering with community groups and elected officials to help property owners, which Johnson and Dromm said wouldn’t be feasible in the current crisis.

Coronavirus Plasma Credit?

New York Sen. Brad Hoylman (D) on Tuesday called for the creation of a $1,000 personal income tax credit to encourage individuals who have recovered from Covid-19 to donate their blood plasma for treatment and medical research.

The bill would take effect immediately and apply to the taxable year that began on January 1.

“The COVID-19 pandemic is the worst public health crisis to hit New York in more than a century,” Hoylman said in a statement. “New Yorkers who survived the virus have a major role to play in our fight to find treatments and a cure.”

Blood plasma from Covid-19 survivors, which contains antibodies to the disease, is already being used to treat seriously ill patients with life-threatening infections.

North Carolina Adds Relief

North Carolina announced on Tuesday that it is extending its waiver of late-filing penalties to more types of taxes.

The relief will cover a number of additional types of levies, including sales and use, and withholding taxes. Those filing and deadline extensions will extend to July 15. The Department of Revenue had previously said it was extending deadlines for filing and payments of corporate and personal income taxes until July 15.

The department is required by state law to continue charging interest, currently set at 5%.

State legislative leaders issued a joint statement Tuesday supporting the deferral of interest on delayed income tax payments, but said a measure to do so would have to be approved by lawmakers and the governor. The Legislature is scheduled to reconvene April 28.

Ohio Turns Focus to Saving Jobs

JobsOhio, the quasi-private development arm funded by Ohio’s liquor tax, plans to use that tax to rev up business activity in a state where more than 100,000 workers have already been laid off due to the new coronavirus.

JobsOhio is making a $2 million long-term, low-interest loan to Appalachian Growth Capital, a southern Ohio lender, so that the organization can keep area small businesses up and running in one of the poorest parts of the country, Gov. Mike DeWine (R) said at a Tuesday press conference.

DeWine indicated that JobsOhio, which normally provides incentives to help businesses expand, would shift strategies and use millions in tax dollars to provide incentives to help businesses survive. He said more announcements on the front would be made in the coming days.

Tennessee Extending Deadlines

The Tennessee Department of Revenue announced Tuesday that it is extending the filing deadlines for its Hall income, franchise and excise, and business tax returns.

Tennessee doesn’t have a traditional income tax, but imposes a levy on dividends and interest known as the Hall income tax. Returns for fiscal years that ended Dec. 31 are now due July 15, instead of April 15. The new due date is in line with the new federal deadline announced March 20 by the Internal Revenue Service.

The state’s franchise and excise tax returns were also extended to July 15 for businesses that operate under a calendar year. The same is true for business tax returns.

Interest and penalties will be waived during the extensions. The department said taxpayers could also request penalty waivers or ask for monthly payment plans, and that those requests would be reviewed on a case-by-case basis.

“We know that taxpayers are doing all they can to meet the current challenges while continuing to comply with state tax requirements,” David Gerregano, the state’s revenue commissioner, said in a statement Tuesday. “We hope to offer some relief through the extension of these deadlines.”

Louisiana Eases Underpayment Penalties

The Louisiana Department of Revenue is waiving penalties associated with the underpayment of estimated taxes if taxpayers pay at least 90% of the amounts they paid in 2019.

Those payments are due and must be paid on April 15 and June 15, it said in guidance released Monday.

The department is also extending the deadline for elections for pass-through entities to July 15 and extending the time to transfer credits for the 2019 tax period by 30 days.

—With assistance from John Herzfed in New York City, Alex Ebert in Columbus, Ohio, and Michael J. Bologna in Chicago.

(Adds Illinois, Indiana, and New York.)

To contact the reporters on this story: Andrew M. Ballard in Raleigh, N.C. at aballard@bloomberglaw.com; Laura Mahoney in Sacramento, Calif. at lmahoney@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; David Jolly at djolly@bloombergtax.com