Tax Agencies

Tax Agencies: State and Federal Tax Agencies Announce Deadline Extensions

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State and federal tax agencies announced a variety of deadline extensions for taxpayers impacted by the COVID-19 pandemic.

Internal Revenue Service

The IRS is extending its filing deadline to July 15, U.S. Treasury Secretary Steven T. Mnuchin announced this morning, although official guidance was not posted online.

Earlier in the week, the IRS extended the deadline for payments – but not filing – for payments up to $1 million for individuals and up to $10 million for corporate income tax. Today’s announcement that July 15 is the deadline for both filing and paying supersedes the prior guidance. Still, Mnunchin urged Americans to file their tax returns by April 15 so those who will receive a refund will be able to take advantage of the funds sooner.

Additionally, the IRS website notified taxpayers that the agency has temporarily closed all Taxpayer Assistance Centers and discontinued face-to-face service throughout the country until further notice.

Franchise Tax Board

The Franchise Tax Board issued a March 18 notice that the agency is postponing until July 15 the filing and payment deadlines for all individuals and business entities for 2019 tax returns, 2019 tax return payments, 2020 first- and second-quarter estimate payments, 2020 limited liability company taxes and fees and 2020 non-wage withholding payments.

Taxpayers do not need to claim any special treatment or call FTB to qualify for this relief, the agency said.

The FTB also encouraged taxpayers to file tax returns on time, if possible, to get their refunds – including refundable tax credits – as soon as possible.

“During this public health emergency, FTB continues to process tax returns, issue refunds, and provide phone and live chat service to taxpayers needing assistance,” the agency said in its news release.

Office of Tax Appeals

The Office of Tax Appeals issued a March 18 notice allowing an extension of time for taxpayers affected by COVID-19 to file briefing or other documents.

In a separate notice, the OTA stated: “At its discretion, OTA may reschedule, alter the format, or relocate hearings due to changing circumstances, including a change in public health directives or recommended procedures by federal, state or local government authorities.”

Of the 11 tax appeal hearings scheduled for March 17 through March 19, all but one were postponed.

California Department of Tax and Fee Administration

The California Department of Tax and Fee Administration has not issued any new guidance since posting a website notice – reported in last week’s CalTaxNews – that provides information on how to request extensions for filing returns and paying taxes administered by the agency.

State Board of Equalization

The State Board of Equalization’s website includes links to the governor’s executive orders and to general COVID-19 guidance but does not include any special notices regarding potential property tax relief.

The webpage with general information includes a question-and-answer section that states: “What about county property taxes? Has that deadline changed? Not yet. Check with your county for updates.” The second installment of locally assessed property taxes is due by April 10.

Employment Development Department

The Employment Development Department, which administers employment taxes, created a webpage to assist employers as well as applicants for unemployment insurance. The section on taxes states: “Employers experiencing a hardship as a result of COVID-19 may request up to a 60-day extension of time from the EDD to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. A written request for extension must be received within 60 days from the original delinquent date of the payment or return. For questions, employers may call the EDD Taxpayer Assistance Center.”

In October, the EDD projected that the Unemployment Insurance Program, funded by taxes on employers, would have a $3.3 billion balance by the end of 2020 and $3.4 billion by the end of 2021, but warned that “if changes are not made to the current financing structure, the UI Fund may not maintain a balance high enough to withstand an economic downturn.”

The downturn is here. Claims for unemployment insurance spiked dramatically this week as COVID-19 forced employers to close their doors. The U.S. Department of Labor reported yesterday that advance claims on unemployment insurance rose to 281,000 nationwide and 58,208 in California – increases of 70,000 and 14,823, respectively. The total number of new claims in California is the largest in the nation and represents a 34 percent increase over last week.

“While these numbers represent sharp increases, the worst is likely yet to come,” the San Jose Mercury News reported. “This data period ended March 14. Since then, Bay Area counties have issued shelter-in-place mandates, causing nonessential businesses to shutter. In a Facebook Live address Wednesday evening, Governor Gavin Newsom said the state had received 80,000 applications just in the last day.”

“We average about 2,000 unemployment insurance claims a day,” Newsom said. “Two days ago or three days, we saw about 40,000 applications. After that, 70,000 applications. Yesterday, 80,000 unemployment applications.”

Department of Motor Vehicles

The Department of Motor Vehicles, which administers the state’s vehicle tax, announced March 16 that it has asked law enforcement officers “to exercise discretion for 60 days in their enforcement of driver license and vehicle registration expiration dates” effective March 16.

The DMV added that the office “may waive vehicle registration penalties” for vehicle owners who are not eligible to use the agency’s online, mail or kiosk options and who meet specified age and health requirements or are “individuals with complex driving history.