California Announces Sales Tax Payment Plan for Small Businesses due to COVID-19

Effective April 2, 2020, small businesses with less than $5 million in taxable annual sales can take advantage of an interest- and penalty-free sales tax payment plan being offered by the California Department of Tax and Fee Administration (CDTFA) due to COVID-19. Under the payment plan, qualifying businesses can enter into a payment plan to distribute up to $50,000 of sales tax liability over a 12-month period, interest-free and penalty-free. Payment plan requests can be made through the CDTFA online services system. Businesses that don’t fall within these parameters can contact the CDTFA. The CDTFA retains administrative flexibility to assist businesses needing relief during disasters.

The sales tax payment plan is in addition to several other tax relief efforts that the CDTFA is offering due to COVID-19. Effective March 30, 2020, all taxpayers who file a return for less than $1 million in tax will have an additional 3 months to file their return. Returns for the first quarter of 2020 are due on July 31, 2020. If the tax liability is $1 million or more, the taxpayer may still request an extension if they are unable to file and pay timely. These requests will be evaluated on a case-by-case basis and taxpayers will be notified if their extension has been approved or denied. For additional information, visit the CDTFA COVID-19 State of Emergency webpage. Additionally, the state is providing a 60-day extension for taxpayers to file a refund claim for any refund that must otherwise be filed by July 31, 2020. The state is also providing, through July 31, 2020, a 60-day extension for requesting a tax appeal with the Office of Tax Appeals. (COVID-19 State of Emergency webpage; News Release, April 3, 2020, California Department of Tax and Fee Administration)

Posted on April 14, 2020