United States

California announces tax relief due to wildfires

TAX ALERT  | 

Due to recent wildfire activity in northern California, the California Board of Equalization (BOE), the California Department of Tax and Fee Administration (CDTFA) and the California Franchise Tax Board (FTB) have provided guidance on certain tax relief for wildfire-affected taxpayers, including filing and payment extension relief. The relief granted by the tax administration agencies currently includes the counties of Butte, Lake, Mendocino, Napa, Nevada, Orange, Solano, Sonoma and Yuba.

Relief for CDTFA-administered taxes

The CDTFA administers over 30 taxes and fees, including the state’s sales and use tax, and other taxes including the alcoholic beverage tax, various fuel taxes and the cigarette tax. Potential relief includes extensions to file returns and relief from penalties and interest. Relief may be requested through the CDTFA website located here.

Relief for BOE-administered taxes

The BOE, which is responsible for reviewing, equalizing and adjusting property tax assessments, has also provided wildfire-related relief guidance. A taxpayer whose property was damaged or destroyed by the fire may be able to obtain property tax relief through their county assessor within the time specified by local law. Property tax relief is available to owners of real property, business equipment and fixtures, orchards and agricultural groves, and to other various property.

Taxpayers with questions may contact the BOE at its Customer Service Center by calling 1-800-400-7115.

Relief for FTB-administered taxes

The FTB, which principally administers the personal income tax and corporate tax, conforms to any federal postponement periods for presidentially declared disasters. The IRS recently granted relief to individuals and businesses in the counties of Butte, Lake, Mendocino, Napa, Nevada, Orange, Solano, Sonoma and Yuba. Accordingly, California follows that schedule of relief.

The FTB grant of relief includes postponement of various tax filing and payment deadlines until Jan. 31, 2018, that occurred beginning on Oct. 8, 2017. The postponed deadline applies to individual filers whose tax-filing extension runs out on Oct. 16, 2017 (the postponement does not apply to associated tax payments, which were originally due April 18, 2017). Postponed deadlines also include quarterly estimated tax payments due on Jan. 16, 2018, quarterly payroll and excise tax returns due on Oct. 31, 2017 and calendar-year tax exempt organizations whose 2016 extensions run out on Nov. 15, 2017.

Affected taxpayers may claim a deduction for a disaster loss sustained in the governor-declared and/or president-declared disaster areas. The taxpayer may either claim the loss in the tax year prior to the tax year in which the disaster occurred by filing an amended return, or in the year in which the disaster occurred when the taxpayer files its 2017 return. To expedite a refund for a disaster loss, the taxpayer should write the name of the disaster in red in at the top of the state tax return, or, if e-filing, follow the software instructions.

Disaster victims may receive free copies of previously filed state returns to replace lost or damaged ones by completing FTB Form 3516.

Taxpayers with questions may contact the FTB by calling 916-845-4800.

Additional counties may be added to the list of counties qualifying for tax relief. Taxpayers affected by wildfires or other natural disasters should speak to their tax advisors with questions.

RSM acknowledges the contributions of Alicia Cerruti, CPA, of our Alliance Firm PISENTI & BRINKER LLP, for insights into these announcements.

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