IRS issues federal tax deadline relief for California severe winter storms, flooding and mudslides disaster area

The IRS announced disaster relief that extends federal tax deadlines for taxpayers in certain California counties to May 15, 2023. This relief is in response to the severe winter storms, flooding and mudslides experienced in the affected counties and Federal Emergency Management Agency’s (FEMA’s) resulting disaster area declaration.

Who is eligible for the federal tax deadline relief

The covered disaster area includes the following counties:

Alameda, Colusa, Contra Costa, El Dorado, Fresno, Glenn, Humboldt, Kings, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Tulare, Ventura, Yolo and Yuba counties.

The federal tax relief applies to:

• Individuals who live in the covered disaster area
• Businesses (including tax-exempt organizations) whose principal place of business is located in the covered disaster area
• Certain relief workers in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster
• Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline are in the covered disaster area

Relief provided

Affected individuals and businesses will have until May 15, 2023, to file returns and pay any taxes that were originally due. That also applies to taxpayers not in the covered disaster area, but whose records necessary to meet a deadline are in the covered disaster area. The May 15, 2023, deadline also applies to the quarterly estimated tax payments normally due Jan. 17, 2023, and April 18, 2023, as well as quarterly payroll and excise tax returns normally due Jan. 31, 2023.

In addition, penalties on payroll and excise tax deposits due on or after Jan. 8, 2023, and before Jan. 23, 2023, will be abated as long as the tax deposits are made by Jan. 23, 2023.

The relief does not extend to information returns in the W-2, 1094, 1095, 1097, 1098 or 1099 series, Forms 1042-S, 3921, 3922 or 8027, or to employment and excise tax deposits, with few exceptions. However, penalties on deposits due on or after Jan. 8, 2023, and before Jan. 23, 2023, will be abated if the tax deposits are made by Jan. 23, 2023.

Casualty losses

Affected taxpayers with casualty losses attributable to the federally declared disaster may elect to take losses into account either in the tax year the loss occurred or the prior tax year. 

California state tax deadline relief

On Jan. 13, 2023, California announced conformity with the IRS-provided relief.  California’s Franchise Tax Board has extended the filing and payment deadlines for individuals and businesses in California until May 15, 2023.

This relief applies to deadlines falling on or after January 8, 2023, and before May 15, 2023, including the 2022 individual income tax returns due on April 18 and the quarterly estimated tax payments typically due on January 17, 2023, and April 18, 2023.

California also previously issued two additional relief declarations:

• The California Employment Development Department (EDD) informed employers statewide that they are eligible to request an extension of up to two months to file their state payroll reports and/or deposit payroll taxes without interest or penalty. A written request for extension must be received by the EDD within two months from the original delinquent date of the payment or return.
• The California Department of Tax and Fee Administration (CDTFA) issued relief including: (1) an extension of up to three months to file and pay taxes or fees, (2) relief from penalty and interest, and (3) providing of replacement copies of lost tax records free of charge. Additionally, the CDTFA indicated it could also extend the deadline for filings delayed by disruption of service from the U.S. Postal Service, private mail and freight companies. Taxpayers seeking relief must apply.

Questions?

Please reach out to your Baker Tilly advisor if you have questions regarding how the federal and California tax deadline relief affect you.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.