On April 3, 2020, California Governor Gavin Newsom announced the ability for small businesses to defer up to $50,000 of Sales and Use Tax liability for up to 12 months without incurring penalties or interest. The announcement provides immediate relief to California small businesses, defined as those generating less than $5,000,000 of annual taxable sales.
Qualifying small businesses can apply for a payment plan to remit up to $50,000 of sales and use tax liability over a 12-month period interest free. For example, if an eligible small business wishes to defer their 2020 first quarter sales and use tax liability up to $50,000, they can do so over 12 monthly installments beginning with the first payment due on July 31, 2020. This payment due date coincides with the extended due date of first quarter sales and use tax returns from April 30, 2020 to July 31, 2020 (note, the extension is automatic for taxpayers filing a return less than $1 Million dollars. Taxpayers with a tax liability in excess of $1 Million dollars need to request an extension to file). For further information on the extensions and relief plans, visit the California Department of Tax and Fee Administration’s (“CDTFA”) State of Emergency website here.
For large businesses exceeding $5,000,000 of taxable sales, other relief efforts are available and done on a case by case basis. For large businesses seeking relief, they should contact the CDTFA Customer Service Center at 1-800-400-7115.
A list of CDTFA filings for various industries and extended due dates in connection with the COVID-19 relief efforts can be found here.