Editor’s Note. As a San Francisco CPA firm, we have many clients who may have exposure to the recent wildfires in Northern California. Fire victims may be able to take advantage of tax relief. Here is a blog post on the topic; if you have experienced damage due to the wildfires, please reach out to one of our San Francisco based accountants.
As deadly wildfires continue to rage across California, both the California Department of Taxes and Fee Administration (“CDTFA” formerly “BOE”) and the Internal Revenue Service (“IRS”) have announced tax relief efforts for individuals and businesses affected by the disaster. Other federal departments and organizations are also pitching in, offering direct assistance and low-interest loans to support recovery.
California State Government Steps In To Ease Tax Burden
On Wednesday, October 12, 2017, California Governor Jerry Brown issued an emergency proclamation for Butte, Lake, Mendocino, Napa, Nevada, Orange, Solano, Sonoma, and Yuba counties. Regions hit hard by multiple wildfires that, to date, have burned over 212,000 acres and caused at least 31 deaths.
The CDTFA followed up the emergency proclamation by announcing: “Business owners and other tax and fee payers affected by these fires may request extensions to file returns and relief from penalties and/or interest.” The list of taxes and fees eligible for relief include: Sales and Use Taxes. Water Rights Fee, Integrated Waste Management Fee, Emergency Telephone Users Surcharge, Energy Resources Surcharge, Timber Yield Tax, and many others. A complete list can be found here.
Tax and fee payers request relief from penalties and/or interest and ask for an extension of time to file their tax or fee returns either by visiting the CDTFA website or by calling CDTFA’s Customer Service Center toll-free at 1-800-400-7115 (TTY: 711).
Federal Assistance Also On The Way
Earlier in the week, Gov. Brown secured a Presidential Major Disaster Declaration, garnering federal support for fire relief. Following the disaster declaration, the IRS announced that affected taxpayers in California will receive federal tax relief. Currently, relief applies to taxpayers in seven counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma, and Yuba. Individuals and businesses in those counties, as well as firefighters and relief workers who live elsewhere, may qualify for an extension.
The complete details of the IRS tax relief can be found in their official statement. But in short, the IRS is allowing taxpayers with certain payments due any time after October 8, 2017 to make that payment by January 31, 2018, without incurring penalties or late fees. Some of the taxes and fees that can be delayed include: “individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns.”
Tax relief will also affect quarterly estimated income tax payments due January 16, 2018, and quarterly payroll and excise tax returns due on October 31, 2017. Tax-exempt organizations that operate on a calendar-year basis and had an extension due November 15, 2017, will also be eligible for relief.
The IRS stated that they automatically identify taxpayers located in the covered disaster area and will apply filing and payment relief. However, if a relief-eligible taxpayer does receive a late filing or payment penalty notice from the IRS, they should call the number on the notice to have the penalty removed. Additionally, taxpayers who reside or have a business located outside the disaster area but were affected must call the IRS disaster hotline at 1-866-562-5227 to request tax relief.
FEMA To Provide Direct Aid
The Federal Government has also announced that residents in Sonoma and Napa counties may now request disaster assistance from the Federal Emergency Management Agency (“FEMA”) to aid in recovery. Disaster assistance for individuals can include grants to help pay for housing and home repairs, uninsured and under-insured personal property losses, and other serious disaster-related needs not covered by insurance. According to FEMA’s news release, grants do not have to be repaid, and assistance is not taxable and will not affect eligibility for Social Security, Medicaid or other federal benefits.
Affected residents can apply for FEMA aid here, or by phone at 1-800-621-3362 or the TTY number, 1-800-462-7585.
Small Businesses and Individuals Can Access Low-Interest Recovery Loans
The US Small Business Administration (“SBA”) offers low-interest disaster loans for both businesses and individuals who are victims of natural disasters. Businesses of all sizes are eligible, including private businesses and non-profit organizations. Homeowners and renters who do not own businesses are also eligible for low-rate disaster loans meant to cover losses not fully covered by insurance or other recoveries.
To learn more about the SBA’s disaster loan program, visit here
Editors Summary. We issue this bulletin so that any of our existing or potential clients who may have been impacted by the recent WildFires in Northern California can be educated. If so, please reach out to us for a consultation with one of our San Francisco accountants.