McGeorge Adjunct Professor Chris Micheli

Today we’ll take a look at how Governor Newsom’s executive orders impact tax obligations in California. On March 30, Governor Newsom issued Executive Order N-40-20, which is intended to provide relief to California’s small businesses. This particular executive order has a number of provisions related to state tax laws that are intended to provide extensions for small businesses and individuals.

One provision allows the California Department of Tax and Fee Administration (CDTFA) to offer a 90-day extension for tax returns and tax payments for all businesses filing a return that owe less than $1 million in taxes.

The EO also extends the window for taxpayers to file an administrative appeal with CDTFA. Normally, taxpayers have 30 days to file an appeal. Gov. Newsom’s EO extends the period by 60 days.

The last part of the EO that falls under CDTFA is a provision that provides small businesses – defined as those making less than $5 million in taxable, annual sales – with the ability to take advantage of a 12-month interest-free payment plan for up to $50,000 for their sales and use tax liability. It’s basically an interest-free loan from the state.

The other affected tax agency is the Franchise Tax Board. Every year, FTB staff prepares an annual report to the Legislature on all the changes that were made in the prior year to the Federal Internal Revenue Code with an explanation of those changes and what the equivalent of corresponding state law is. The EO gives FTB staff an extra 60 days to prepare that report.

In a separate executive order – N-25-20 – Gov. Newsom told the FTB to use its administrative powers to provide extensions of time to individuals and businesses who are affected by complying with state and local public health recommendations related to COVID-19.

The FTB also issued a separate notice announcing tax relief for all Californians. In conformity with the Federal IRS, California’s FTB announced it will extend the tax filing and payment deadlines of April 15 to July 15.

You can find the full transcript of today’s podcast here.

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