California business owners needing financial assistance can receive immediate tax relief from the California Department of Tax and Fee Administration (CDTFA) in the form of automatic filing extensions, interest-free payment plans, or a hiring tax credit of up to $100,000 to offset income or sales and use taxes.
“Small business owners need our help and support,” stated Director Nick Maduros. “The Governor’s action provides immediate assistance for businesses impacted by COVID-19. We recognize that many of our taxpayers are facing extreme challenges due to the pandemic, and our hope is that these relief efforts will enable businesses to weather this difficult storm.”
Automatic Filing Extension
Taxpayers filing CDTFA returns for less than $1 million tax will automatically be granted a three-month extension on payments and returns originally due between December 1, 2020, and April 30, 2021. For example, 4th quarter 2020 returns and payments will now be due in April 2021. Eligible taxpayers are not required to make a request to take advantage of this extension.
Interest-free Payment Plans
Qualified small businesses can apply for a 12-month, interest-free payment plan to defer payment of up to $50,000 for 4th quarter 2020 and the 1st quarter of 2021 in sales and use tax liability. The deferred tax would be paid 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 will be eligible for the new payment plans, including those taxpayers already in existing payment arrangements with the 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 for an interest-free payment plan. CDTFA will extend these payment arrangements to all businesses demonstrating a significant drop in sales, regardless of annual sales volume.
More information on extensions and payment plans will be available soon on CDTFA’s COVID-19 webpage or you can contact CDTFA’s Customer Service Center toll-free at 1-800-400-7115 (TTY: 711), Monday through Friday from 8 a.m. to 5 p.m. (Pacific time).
Small Business Hiring Tax Credit
Beginning today and continuing through January 15, 2021, CDTFA is accepting applications, through its online reservation system, for qualified small business owners to reserve up to a $100,000 hiring tax credit. The small business hiring tax credit provides a credit that a small business employer can use to offset their income taxes or their sales and use taxes when filing their tax 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. To learn more about qualifications and how to apply, view the Frequently Asked Questions available on the CDTFA website.
The California Department of Tax and Fee Administration (CDTFA) administers California’s sales and use, fuel, tobacco, alcohol, and cannabis taxes, as well as a variety of other taxes and fees that fund specific state programs. CDTFA-administered programs account for over $73 billion annually, which in turn supports local essential services such as transportation, public safety and health, libraries, schools, social services, and natural resource management programs through the distribution of tax dollars going directly to local communities.