The California Department of Tax and Fee Administration (CDTFA) is providing immediate tax relief for small business owners due to the impact of COVID-19.
Taxpayers that file CDTFA returns for less than $1 million tax are automatically granted a three-month extension on payments and returns due between December 1, 2020 and April 30, 2021. As an example, Q4 2020 returns and payments will be due in April 2021. Eligible taxpayers do not need to make a request for the extension as it is automatically granted.
Qualified small businesses can apply for a 12-month, interest-free payment plan to defer payment of up to $50,000 for Q4 2020 and Q1 2021 in sales and use tax liability. The deferred tax payment would take place in twelve equal monthly installments, with the first payment not due until April 2021. Any business with annual taxable sales of $5 million or less is eligible for the deferred payment plan, including taxpayers already in existing payment arrangements with CDTFA. All existing interest-free payment plans will remain in place. Businesses with sales greater than $5 million in sectors particularly impacted by operational restrictions due to the pandemic may also apply. CDTFA has stated that it will extend these payment arrangements to all businesses demonstrating a significant drop in sales, regardless of annual sales volume.
From December 1, 2020 through January 15, 2021, CDTFA is accepting applications online for qualified small business owners to reserve up to a $100,000 hiring tax credit. A small business employer can use the credit to offset their income taxes or their sales and use taxes when filing returns. The tentative credit reservation is allocated on a first-come, first-served basis. Within 30 days of receiving an application, CDTFA will notify each applicant via email whether a tentative credit reservation has been allocated to them and the amount.
For additional information on California’s COVID-19 relief, visit the CDTFA COVID-19 webpage. (CDTFA Offers Immediate Tax Relief to Small Business Owners, December 1, 2020, CDTFA website)