Tax deferrals, credits + 2021 new state and local laws
We have some news on some modest tax assistance for restaurants and what we hope is a helpful resource for compliance with new state and local laws and regulations- some enacted on emergency basis and in effect now- and others taking effect in 2021.
Modest tax relief available now
Back in March, the CRA quickly urged Governor Newsom to allow a strategic set of deferments of tax payments and throughout the year we continued the push for additional deferments of tax payments, establishment of grant programs, and hiring tax credits for restaurants.
Governor Newsom responded to the economic crisis then by offering filing extensions and deferrals of tax payments, including sales tax.
Our work continues for more robust relief heading into the 2021 legislative session, but a new round of modest relief is available now.
Now, taxpayers filing California Department of Tax and Fee Authority (CDTFA) returns for less than $1 million tax will automatically be granted a three-month extension on payments and returns originally due between December 1, 2020, and April 30, 2021. Taxpayers with $1 million or more must request an extension.
Sales & use tax deferrals
Earlier in the year, Governor Newsom also responded by allowing deferments of up to $50,000 of sales tax payments. We are pleased to report that program has now been renewed and allows qualified small businesses to apply for a one-year, interest free payment plan to defer payment of up to $50,000 for the 4th quarter of 2020 and the first quarter of 2021.
While businesses with annual sales of $5 million or less are a key focus of the program, CDTFA will extend these payment plans to larger taxpayers in sectors that have been particularly hard hit by the pandemic and the orders to cease full operation.
More information on filing extensions and sales and use tax deferrals:
Small business hiring tax credit
This hiring tax credit while limited in application, provides employers with 100 or fewer employees on Dec. 31, 2019 with a tax credit of $1,000 for each qualified hire between July 1st and Nov. 30th, 2020. Qualified employers must have had a 50% reduction in gross receipts during the 2nd quarter of 2020, compared to the 2nd quarter of 2019. Eligible businesses are entitled to up to $100,000 in hiring tax credits if they receive a tentative credit reservation.
Applications accepted until January 15, 2021.
Due to the fund limitations we encourage you to act immediately!
File your credit reservation, learn more, and see frequently asked questions here:
New state and local laws and regulations
Be sure to check out this link with information and resources for compliance with new emergency regulations and state and local laws.