Since the IRS announced that the due date for filing and payment of individual, corporate, and fiduciary income tax returns have been extended to July 15, 2020, the states have followed suit, including the Southwestern states that Lewis Roca Rothgerber Christie covers - Arizona, California, Colorado, Nevada, New Mexico, and Texas. This alert will look at how these Southwestern states have implemented income tax relief and what relief these states have provided for sales tax and property tax filing and payment deadlines. This is current as of April 8 but States may take action after this date to provide tax relief.
Income Tax (Corporate and Personal) — Filing and Payment Deadlines Extended to July 15
On March 20, 2020, the Arizona Department of Revenue issued Arizona General Tax Notice GTN 20-1, announcing a number of extensions relating to income tax filing and payment deadlines.
Filing & Payment Deadlines: 2019 income tax filing and payment deadlines are extended from April 15, 2020 to July 15, 2020. The extension applies to individual, corporate, and fiduciary tax returns. The Department also stated that taxpayers who file and/or pay after April 15 but on or before July 15 will not be assessed late filing or late payment penalties.
Automatic Extensions: Taxpayers who request an automatic extension of time for filing their federal tax returns from the Internal Revenue Service will be granted a 6-month extension (5½ months for fiduciary returns) to file their Arizona returns without the need to file an Arizona extension request. Taxpayers who do not file federal returns can still obtain an Arizona extension by filing an Arizona Form 204 (individuals), Form 120EXT (corporate filers), or Form 141AZ EXT (fiduciary filers).
The filing extension does not provide an extension of time to pay any Arizona tax liability; at least 90% of a taxpayer’s reported Arizona income tax liability must still be paid by July 15 to avoid penalties and interest.
Estimated Tax Payments: There is no change to the due date for Arizona estimated tax payments due on April 15, 2020.
Tax Credits: The due dates for Arizona Form 140ET (Credit for Increased Excise Taxes) and Form 140PTC (Property Tax Refund (Credit) Claim) are extended to July 15, 2020.
The deadline for taxpayers to make contributions to certified school tuition organizations, public schools, and qualifying charitable organizations and claim the credit on their 2019 income tax return remains April 15, 2020.
Transaction Privilege Tax — No Relief
As of the date of this alert, the Department of Revenue has not authorized any relief for transaction privilege tax (TPT) filers. Filing and payment dates remain the same. Taxpayers who opt to delay TPT payments or returns should be aware that they will be subject to late filing and/or late payment penalties unless the Department acts to provide relief for TPT filings.
Property Tax — No Relief
The current payment deadlines for property taxes have not been changed or extended. The second-half payment for the 2019 tax year was due on March 1 and will be delinquent if not paid by May 1, 2020. Extending these deadlines requires legislative action. On March 26, the Maricopa County Treasurer (among other county treasurers) asked the Arizona Legislature to extend the second-half payment deadline for all taxpayers to June 1. They also requested that the Legislature grant all county treasurers statewide the authority to waive all penalties and interest associated with any delinquent property tax. However, it may be hard to delay property tax payments themselves because debt service and other obligations of the various taxing jurisdictions are keyed to these property tax due dates.
Business Taxes Administered by the CDTFA — Additional 3 Months for “Small Businesses” to File and Pay Sales and Use Taxes
Following an Executive Order issued by Governor Gavin Newsom on March 30 to expand tax relief for small business taxpayers, the California Department of Tax and Fee Administration (CDTFA) announced that all small businesses will have an additional three months to file returns and pay taxes administered by the department. The three-month extension applies to a tax return or tax payment for any businesses filing a return for less than $1 million in tax. According to the CDTFA, approximately 99.5% of business taxpayers fall below the $1 million threshold for their current California sales and use tax obligation, and those returns for the first quarter of 2020 will now be due on July 31, 2020.
Qualifying taxpayers are not required to file a request for extension or request relief from penalty or interest. The automatic extension will remain in effect through the reporting of taxes and fees due on or before July 31, 2020.
Taxpayers with a liability of $1 million or more may still request an extension if they are unable to file and pay on time. These requests will be evaluated on a case-by-case basis and taxpayers will be notified if their extension has been approved or denied. Applications may be submitted online through the CDTFA’s online services system by selecting the option for “a disaster occurred, such as a fire, flood, storm, tidal wave, earthquake, or similar public calamity, whether or not resulting from natural causes, which has prevented the timely filing or payment.” Applications may also be submitted by e-mail or letter. Additional application instructions are available here.
The same extension provisions apply to the other tax and fee programs administered by the CDTFA. A complete list of the extended deadlines is available on the CDTFA’s website.
Refund Applications: The Executive Order also provides business taxpayers with additional time to file claims for refund and appeals to the Office of Tax Appeals. Taxpayers looking to make refund claims with CDTFA during this period will have an additional 60 days to file. Similarly, taxpayers seeking an appeal of a CDTFA tax determination to the Office of Tax Appeals will have 60 additional days to file the appropriate request. The extended period is available to all taxpayers, regardless of size.
Payment Plans: On April 2, 2020, Governor Newsom announced tax deferral and payment plans for certain small business taxpayers. Taxpayers with less than $5 million in taxable annual sales can take advantage of a 12-month, interest-free payment plan for up to $50,000 of sales and use tax liability. Qualifying taxpayers with deferred liabilities up to $50,000 will pay their tax due in 12 equal monthly installments. No interest or penalties will be assessed against the liability. If a taxpayer owes more than $50,000 and needs a payment plan for the additional amount, the CDFTA will have the taxpayer enter into one payment plan and will adjust the appropriate amount of interest due the end of the 12-month period.
The program is only available for sales and use tax liabilities. Payment plan requests can be made through the CDTFA’s online services system.
Income and Franchise Taxes — Filing and Payment Deadlines Extended to July 15
The California Franchise Tax Board (FTB), which administers the state’s personal income and business franchise taxes, announced that the filing and payment deadlines for all individuals and business entities would be extended to July 15, 2020. The extension of time applies to the following returns and payments:
2019 tax returns
2019 tax return payments
2020 1st and 2nd quarter estimate payments
2020 LLC taxes and fees
2020 non-wage withholding payments
The extension gives taxpayers a deadline consistent with that of the Internal Revenue Service (IRS) without the federal dollar limitations and follows the federal relief described in Notice 2020-17. The FTB had previously announced extensions until June 15, in accordance with a March 12 executive order issued by Governor Newsom.
A complete list of extended deadlines is available on the FTB’s website.
The FTB also issued Notice 2020-02, which extended deadlines for the following time-sensitive filings until July 15:
Claims for refunds
Protests of proposed tax assessments
Appeals to the Office of Tax Appeals of Notices of Action denying claims for refund or affirming tax assessments
The notice also provides the procedures for filing under the extended deadlines.
Property Tax — No Relief
California property tax payments remain due on April 10, 2020. Neither the State Board of Equalization (SBOE) nor the State Controller have the authority to extend payment deadlines. In a “frequently asked questions” release, the SBOE noted that the county treasurer for each county has the power to waive penalties and interest for late payments that are beyond the taxpayer’s control (although they cannot extend payment deadlines) and urged taxpayers to contact their local county treasurer for relief. Some counties, like Los Angeles County, have already announced that they will allow taxpayers to apply to penalty waivers starting on April 11, 2020.
Income Tax — Filing and Payment Deadlines Extended to July 15
Colorado Governor Jared Polis issued an Executive Order on March 20 that extended income tax payment deadlines for the 2019 tax year for all corporate and individual taxpayers by 90 days, from April 15 to July 15, 2020. It also waived any interest that accrues on payments made by July 15.
All income tax returns for the 2019 tax year that were required to be filed by April 15 have been granted an automatic six-month extension, and are now due by October 15, 2020.
The extension will not automatically change income tax payments already scheduled for direct debit on or before April 15. Taxpayers that wish to cancel their currently scheduled direct debit payments in order to take advantage of the deadline extension can do so by emailing the Colorado Department of Revenue at DOR_TaxpayerService@state.co.us. For expedited processing, the Department asks taxpayers to put “Request Cancellation of Direct Debit Payment” in the subject line of the email.
Estimated Payments: Colorado also extended the schedule for estimated payments for the 2020 tax year. Any estimated income tax payment that would otherwise be due between April 15 and June 15 is extended to July 15, 2020. Penalties for estimated payments are waived until July 15, 2020. Colorado did not impose a cap on the amount of taxes that can be deferred.
Sales and Use Tax — No Penalties if April Filing and Payments Made by May 20
The Colorado Department of Revenue announced an extension of filing and payment deadlines for sales and use tax returns due on April 20. Taxpayers may extend these deadlines to May 20, 2020.
The Department will waive penalties and interest that may accrue retailers that file their return and remit the full amount of state and state-administered sales tax due April 20 on or before May 20, 2020. However, if a taxpayer does not file and pay in full by April 20, the taxpayer will not be able to retain its vendor fee. The vendor fee is a percentage of the sales tax collected that a taxpayer is allowed to retain in order to cover the expenses incurred by collecting and remitting state sales tax. The vendor fee is currently 4% of the sales tax remitted and is capped at $1,000 per filing period.
The extension does not apply to self-collecting, home rule jurisdictions (although some jurisdictions, like the City of Denver, have also announced relief provisions). Governor Polis directed the Department of Revenue to coordinate with local governments that choose to extend payment deadlines for sales and use tax.
Property Tax — No Change in Due Dates
In a March 19 bulletin addressed to county assessors, the Colorado Department of Local Affairs Property Tax Division reminded assessors that the Division does not have the authority to change statutory deadlines. It also instructed assessors to work with their local county attorney on any statutorily available relief. Relief may be available through the use of alternate protest and appeal procedures and extensions of time for filing their personal property declaration schedules. For oil and gas property taxes, the assessor has sole discretion to grant an extension, without charge, for an operator, agent or person placed in control of a wellsite or lease by the owner or operator to file their statement.
Property taxes in Colorado are payable in one installment on April 30, or in two equal installments due on the last day of February and June 15, 2020.
International Fuel Tax Agreement — Relief for Vehicles Engaged in COVID-19 Relief Efforts
The Colorado Department of Revenue is offering tax relief by temporarily suspending the requirements associated with the International Fuel Tax Agreement (IFTA) for any motor vehicle engaged in interstate disaster relief efforts as part of the COVID-19 relief effort through June 30, 2020.
The Nevada Department of Taxation has closed all offices to the public until further notice. Taxpayers are advised to pay their taxes online, by mail, or via drop box at Department offices. However, the Nevada Department of Taxation has not announced any extensions or other relief provisions for commerce or sales tax at this time.
Commerce Tax — No Relief
Nevada does not have a state income tax. The state’s commerce tax (applicable to business entities with Nevada gross revenue over $4,000,000 during the taxable year) is due 45 days following the end of the fiscal year, or August 14, 2020.
Sales & Use Tax — No Relief
Generally, sales and use tax returns are due monthly on the last day of the month unless the taxpayer qualifies for quarterly or annual reporting.
Property Tax — No Relief
In Nevada, property tax rates are set in June of each year. The tax bills are then prepared and mailed out by August 1st of each year, and taxes are due on the third Monday in August.
Property owners may elect to pay in installments if the taxes on a parcel exceed $100.00. The 4th installment for the 2019-2020 fiscal tax year was due on March 2, 2020. Nevada has not announced any property tax payment or relief payments at this time.
Income Tax — No Penalties if Return is Filed and Payment Made by July 15
The New Mexico Taxation and Revenue Department (TRD) announced that it will not impose late-filing and late-payment penalties associated with the return filing and payments set forth below, provided that returns and payments are submitted no later than July 15, 2020:
New Mexico personal income tax returns and payments due between April 15 and July 15
New Mexico corporate income tax returns and payments due between April 15 and July 15
Although TRD originally announced that interest would not be waived, it announced in a March 25 press release that taxpayers who filed and paid by the July 15 extended deadline would not accrue interest.
Taxpayers will not have to call or write in order to obtain an extension. TRD is working on changes to its system to reflect these extensions and noted that if taxpayers receive a letter in the mail regarding these taxes for the periods, they can disregard the letter.
Additionally, relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities New Mexico may be entitled to additional relief pursuant to Section 7-1-83, NMSA 1978.
Withholding Tax: Withholding tax returns and payments due between March 25 and July 25 may be submitted without penalty no later than July 25, 2020. Interest will accrue on withholding tax payments made after the original deadline.
Compliance Efforts: On March 30, TRD announced that they would temporarily modify enforcement activities in lights of the COVID-19 pandemic, including:
A 90-day stay on the most severe collection activities, including new liens, seizures, and injunctions
Suspension of a program that automatically garnishes state tax refunds for payment of federal tax debts
Devoting additional resources to quickly clear identity verification questions relating to income tax refunds
Prioritizing review and approval of refund requests, business credits, and abatements of taxes due
Offering managed audits, a voluntary program that can result in a waiver of penalty and interest for 180 days, to potentially noncompliant taxpayers
Assigning additional staff to resolve tax protests
Offering deadline extensions of up to 60 days for taxpayers on payment plans and encouraging taxpayers to make good faith payments to avoid default
Offering taxpayers currently undergoing audit the opportunity to request a 60-day suspension or a waiver giving them more time to produce records
Gross Receipts Tax — No Relief
New Mexico’s gross receipts tax is generally due on or before the 25th day of the month following the month in which the taxable event occurs. As of the date of this alert, TRD has not announced any relief for gross receipts tax filers. Taxpayers who opt to delay gross receipts tax payments or returns should be aware that they will be subject to late filing and/or late payment penalties unless TRD acts to provide relief for gross receipts tax filings.
Property Tax — No Relief
New Mexico property taxes are generally payable to the county treasurer in two equal installments due on November 10 and April 10. Following discussions with the state, second-half tax payments will remain due on April 10, 2020. Additionally, there is no provision in state law that allows the County Treasurer to waive late fees. Taxpayers are encouraged to contact the county treasurer’s office to discuss possible solutions, such as multiple payments.
Franchise Tax — Due Date Extended to July 15
Texas does not have a corporate or personal income tax, but does have a corporate franchise tax. On April 1, the Texas Comptroller announced that it will grant an automatic extension until July 15 to franchise tax filers. Taxpayers do not have to file additional forms to receive an extension; however, Texas generally requires that 100% of the tax paid in the prior year, or 90% of the tax that will be due with the current year’s report, must be paid on or before the original due date of the report in order for the extension to be valid.
Taxpayers who need an additional extension may file a request on or before July 15, 2020.
Sales and Use Tax — No Relief
Texas did not extend the due date for remittance of February sales and use taxes, which were due on March 20. On March 24, the Comptroller announced that it would offer assistance to businesses struggling to pay the full amount of sales taxes they collected in February, including short-term payment agreements and waivers of penalties and interest. Taxpayers were instructed to contact the agency’s enforcement hotline at 800-252-8880 to learn about available options for remaining in compliance and avoiding interest and late fees.
The Comptroller also indicated that each due date would be examined as it approaches. The filing deadline for March sales and use taxes is currently April 20, 2020.
Property Tax — Rendition Deadline May Be Extended
In Texas, property tax bills are mailed in October, and due on February 1.
The Texas Comptroller reminded business owners that April 15 is the deadline to file property tax renditions with their county appraisal districts. Different deadlines apply for certain regulated property. Business owners may file a written request with the chief appraiser asking for an extension of the deadline to May 15, 2020. Some appraisal districts already have extended the deadline for filing rendition statements or property reports to May 15, so taxpayers are advised to check with their local appraisal districts.
A rendition allows property owners to record their opinion of their property’s value and ensures that the appraisal district notifies property owners before changing a recorded value. Exempt property, such as church property and equipment used for farming, is not subject to rendition.
Motor Vehicle Taxes — 90-Day Extension
The Texas Department of Motor Vehicles granted a temporary extension for the registration and titling of purchased vehicles. The extension allows auto dealers and individuals more time before they have to appear in person at a county tax assessor-collector office. In conjunction with that decision, the Texas Comptroller’s office is providing an extension of up to 90 days past the original due date to pay the motor vehicle tax due on vehicle purchases. Late penalties will be assessed as though the last day of the extension is the original due date. The extension does not apply to seller-financed motor vehicle sales.
Insurance Premium Tax — 60-Day Extension Upon Request
The annual independently procured insurance tax report for 2019 is due May 15, 2020; however, the Texas Comptroller will grant, upon request, a 60-day extension until July 15 to file and pay this tax. Taxpayers who have been granted the 60-day extension and need additional time can apply for an additional 30-day extension on or before July 15.
Audits: The Comptroller has temporarily suspended the 60-day deadline for businesses to contest audit results. The suspension applies to both redetermination and refund hearings. Interest accrued during this period will be waived and the Comptroller will notify businesses to reestablish a request deadline at a later date. However, if taxpayers are able to request redetermination during the 60-day deadline, taxpayers are urged to e-mail requests to firstname.lastname@example.org.
Payment Plans: In order to help taxpayers avoid default on existing payment plan agreements, the Comptroller’s office will consider postponing deadlines to remit payments on a case-by-case basis. Postponement will only apply to existing payment plan agreements for periods prior to February 2020. A potential postponement will not extend or delay a taxpayer’s due dates for remitting or reporting tax collected on behalf of state and local governments, nor will it apply to resolution agreements that specify a deadline to make a single lump sum payment of the entire liability. The Comptroller will not reduce the total amount due under the payment plan agreement. After the expiration of the postponement period, all payment deadlines will resume on the next periodic payment deadline as provided in the payment plan agreement and postponed payments will be added to the end of the term of the agreement. Interested taxpayers should contact the Comptroller’s Enforcement Division at 800-252-8880.
For more information, contact Pat Derdenger at email@example.com, Karen Lowell at firstname.lastname@example.org or visit www.lrrc.com.
This material has been prepared by Lewis Roca Rothgerber Christie LLP for informational purposes only and is not legal advice. Specific issues dealing with COVID-19 are fluid and this alert is intended to provide information as it is currently available. Readers should not act upon any information without seeking professional legal advice. Any communication you may have with a Lewis Roca Rothgerber Christie LLP attorney, through this announcement or otherwise, should not be understood by you to be attorney-client communication unless and until you and the firm agree to enter into an attorney-client relationship.Tags: COVID-19 Rapid Response Team, Tax
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Karen Lowell is of counsel in Lewis Roca’s Business Transactions and Tax practice groups, advising clients on a variety of business and tax planning matters.
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Pat is the go-to lawyer for state and local tax issues. With his unmatched knowledge and strong communication skills, he ensures his clients get the best outcome for their bottom line.
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