Reed Smith In-depth

What a year it was. COVID-19 affected every aspect of our lives in 2020, including California tax legislation and the policies adopted by California’s taxing agencies. Despite the difficulties faced in 2020, there were still a number of notable California tax developments. Below, we highlight developments during 2020 regarding the policies of the California taxing agencies, California legislation, and notable decisions from the Court of Appeal and the Office of Tax Appeals. We conclude by outlining what taxpayers should focus on as they move into the new year.

Authors: Shail P. Shah Yoni Fix Rebecca G. Durham

Review of Agency Responses to COVID-19

It seems like March was more than 9 months ago, but 2020 is now history. Beginning with his March 12, 2020 COVID-19 Executive Order, Governor Newsom ordered a 60-day delay of the deadlines for filing state tax returns for individuals and businesses unable to timely file due to the pandemic. The Franchise Tax Board (“FTB”), California Tax and Fee Administration (“CDTFA”), and the Office of Tax Appeals (“OTA”) all responded quickly to offer relief from certain deadlines and on other matters. Here is a brief roundup of those actions, with some recent updates.

Franchise Tax Board

The FTB announced extensions on March 13, but on March 18, revised its guidance. Under the March 18 guidance, the filing and payment deadline for all individuals and business entities was extended to July 15. The extension applied to 2019 returns, 2019 return payments, 2020 estimated payments for the first and second quarter, 2020 limited liability company (“LLC”) taxes and fees, and 2020 non-wage withholding payments. In FAQs on its website, the FTB noted that the extension applies to any business entity with a California return or payment due between March 15 and July 15, including corporations, S corporations, LLCs, partnerships, and other entities with returns due during that period. The FTB did not require proof that a person or business is “affected by the COVID-19 pandemic,” all California taxpayers were considered affected taxpayers. As of December 2020, the FTB had not issued any new guidance or extended any additional deadlines but notes on their website that resources are available for those experiencing financial hardship.