On March 2 and February 24, the State of California and the Internal Revenue Service (IRS), respectively, announced postponement of the filing and payment deadlines to October 16, 2023. This applies for most calendar-year filing residents and businesses in the following California disaster-affected counties only.
Alameda, Alpine, Amador, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El Dorado, Fresno, Glenn, Humboldt, Inyo, Kings, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Nevada, 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, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Ventura, Yolo, and Yuba
The IRS defines an affected taxpayer as:
• An individual
• Any business entity or sole proprietor
• Any shareholder in an S Corporation
The IRS further clarifies the definition of an “affected” taxpayer if the records needed to meet their filing or payment obligations are covered under the relief deadline postponement. An affected taxpayer can be located within or outside of a federally declared disaster area.
To illustrate, how would an Arizona resident who has federal, Arizona, and California tax return and payment requirements handle tax filings? If the California requirement results from ownership in an S Corporation located in a California disaster area, the taxpayer would have until October 16 to meet their federal and California filing and payments obligations. However, Arizona tax obligations will be due on April 18, 2023, or October 16, 2023 upon acceptance of a timely filed extension request.
There are some important deadline differences to note, as the federal and California reliefs do not mirror each other exactly.
For affected taxpayers filing a Federal tax return:
• The postponement to October 16, 2023 applies to original and extended filing and payment deadlines falling on or after December 27, 2022 and before October 16, 2023, including:
√ Individual, gift, trust, and estate income tax returns that would have been due April 18
√ Tax-exempt organization information returns that would have been due May 15
√ Estimated tax payments that would have been due January 17 (for 2022), and April 18, June 15 and September 15 (for 2023)
√ Quarterly payroll and excise tax returns that would have been due January 31, April 30 and July 31
• Eligible taxpayers have until October 16 to make 2022 contributions to their IRA and health savings accounts.
• An extension of time to file a federal return for the 2022 tax year will not be required.
For affected taxpayers filing a California state tax return:
• The postponement to October 16, 2023 applies to:
√ All returns (including payroll) with original and extended filing and payment deadlines falling on or after January 8 and before October 16
√ Estimated tax payments with due dates on January 17 (for 2022) and April 18 (for 2023)
√ Passthrough entity elective tax payments that would have been due prior to October 16
• Employment and excise tax deposits are not included.
• An extension of time to file a California return for the 2022 tax year is not needed, as California already provides for an automatic six-month extension of time to file.
These postponements do not affect any other state, county, or city filing requirements a taxpayer may have. For example, for a taxpayer residing in a disaster-affected California county with federal, Arizona, and California tax return and payment obligations, the Arizona tax return is due on April 18, 2023, or October 16, 2023 upon acceptance of a timely filed extension request. However, the federal and California tax returns and payments are not due until October 16, 2023.
Contact your tax professional and/or payroll provider for more information regarding these changes in filing and payment requirements.
Author, Dyan Cole
Director of Operations
Spiegel Accountancy
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.