What the recent federal disaster declarations mean for your 2022/2023 tax return filing and payment requirements
California Weather-Related Disasters Postpone Many Tax Filing and Payment Dates
We hope this letter finds all of you safe and secure from the recent flooding and weather-related disasters.
As you have likely heard, the IRS has issued four different disaster relief notices for storms in California. In brief, taxpayers who live in (or business taxpayers whose principal place of business is located in) any county in California except Lassen, Modoc, or Shasta, generally have until October 16, 2023, to file their federal income tax returns and pay any tax owed for the 2022 tax year. Additionally, first, second, and third quarter 2023 estimates can all be paid on October 16, 2023, without incurring late-payment penalties.
California has mostly conformed to the IRS’s filing and payment deadline extensions.
You are eligible for automatic relief even if you were not directly harmed by the storms. The only requirement is that you live (or your business is located in) any county in California except for Lassen, Modoc, or Shasta.
If you are one of our clients and you are located in the county of Lassen, Modoc, or Shasta, or you are located outside of California, then you are also eligible for relief based on the fact that your tax professional is located in one of the California counties that falls under the disaster declaration. However, relief for you is not automatic. We must contact the IRS and request specific relief for you. If you live outside of California, your relief might be limited to your federal return only because your state might not allow a similar filing and payment extension.
Please keep the following key points in mind:
The relief available to the vast majority of California taxpayers (business and individuals) is automatic and applies to all income tax return types, as well as gift and estate tax returns;
Any payments due with your 2022 income tax returns, as well as first, second, and third quarter estimated tax payments for 2023, must be paid by October 16, 2023, to avoid late payment penalties.
Individual taxpayers can make 2022 traditional IRA contributions and HSA contributions by October 16, 2023;
Businesses can make 2022 employer matching and pension contributions up until October 16, 2023;
Businesses taking advantage of the passthrough entity elective tax provisions under California law can make their mandatory June 15, 2023, estimate by October 16, 2023; and
Businesses have additional time to file payroll and excise tax returns, but payments and deposits cannot be delayed until October 16, 2023.
However, we believe that even with the delayed due dates, it is important to still complete your returns sooner rather than later so that you know your final tax results as soon as possible. This will allow you the best planning opportunities for use of funds that will not be paid until October, know how much you may owe in October or – and even more important -- if you are due a refund. If you are due a refund you will want to file as soon as possible to get your money back into your own investments.
Scholl & Company has been through these delayed filings many times during our almost four decades of work in this area. During these delayed filings it is not unusual that even making your payments on-time under the delayed disaster rules, the tax agencies systems often do not automatically catch that you paid on time and not late. This can cause erroneous penalty notices from either the IRS or Franchise Tax Board which will require our assistance to clear at additional cost and aggravation to you. Both the IRS and Franchise Tax Board are indicating they believe their systems will be ready for the delayed disaster filings. But, based on past experience, we do want to offer the caution that you may receive notices that require attention even when you fully complied with the delayed filing and payment deadlines.
There are many variations and nuances associated with the multiple disaster declarations made by the IRS and the Franchise Tax Board. If you have any questions related to these rules or how they affect you, please call our office at (831) 758-5966 or email us at success@schollcpa.com and we can discuss your options and situation.
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