January 25, 2023

Re: California Storm Victims Qualify for Tax Relief Deadline

Dear Client:

Due to the recent severe winter storms in California, the Internal Revenue Service (IRS) is giving some California individuals and businesses more time to file their 2022 income tax returns, if they are affected by the storm.

Based on the IRS announcement today on January 24, 2023 (CA-2023-02, January 24, 2023), the storm affected designated areas issued by the Federal Emergency Management Agency (FEMA) including the counties in Calaveras, Merced, Monterey, Sacramento, San Joaquin, San Luis Obispo, Santa Barbara, and Santa Cruz.  https://www.irs.gov/newsroom/irs-announces-tax-relief-for-victims-of-severe-winter-storms-flooding-landslides-and-mudslides-in-california

As you can see, our neighboring counties, such as Los Angeles, Orange County, Riverside, San Bernardino, San Diego are not included. So please note that taxpayers not listed in the above-mentioned counties should file their taxes on the normal tax deadlines.

There is a lot of confusion, even among tax professionals, as to the extended due date to May 15, 2023, as there was an earlier news release on January 11, 2023, where the IRS referred to the FEMA designated area, which included Los Angeles and surrounding counties.  https://www.irs.gov/newsroom/irs-california-storm-victims-qualify-for-tax-relief-april-18-deadline-other-dates-extended-to-may-15

However, January 24^th News Release should be relied upon for the following reasons:

1. Later News Release controls as the IRS can change News Release any time.  Even the IRS says that News Release should not be relied upon,

https://www.taxpayeradvocate.irs.gov/news/ntablog-irs-frequently-asked-questions-can-be-a-trap-for-the-unwary/

• An IRS News Release is not a substantial authority for you to avoid penalties,

https://legalresearch.usfca.edu/c.php?g=523831&p=3580617

• FEMA only provides assistance to the affected individuals and businesses.  Please note the word affected. An eligibility requirement must be met to qualify for assistance for the affected residents and businesses.  Not everyone residing in the noted counties gets FEMA assistance. 

The normal individual tax deadline is April 18, 2023 (April 15, 2023 falls on a Saturday, and next weekday April 17, 2023 is Emancipation Day in Washington DC).

For those who are affected that reside or have business in the above listed the storm designated areas, the filing extension relief includes 2022 individual tax returns normally due on April 18, 2023 extended until May 15, 2023. The filing extension relief also includes 2022 business tax returns normally due on March 15, 2023 (Partnership and S-Corporation) and April 18, 2023 (C-Corporation) extended until May 15, 2023.

The extended deadline also applies to the quarterly estimated tax payments, normally due on January 17, 2023 and April 18, 2023. This means that individual taxpayers can skip making the fourth quarter estimated tax payments for the 2022 tax year normally due on January 17, 2023 and instead include it with the 2022 tax return on or before May 15, 2023.

Additionally, this also means that eligible taxpayers will have until May 15, 2023 to make 2022 contributions to their Individual Retirement Accounts (IRA) and health savings accounts.

The May 15, 2023 deadline also applies to the quarterly payroll and excise tax returns normally due on January 31, 2023. In addition, penalties on payroll and excise tax deposits due on or after January 8, 2023, and before January 23, 2023, will be abated as long as the tax deposits are made by November 22, 2023.

If you have any questions regarding this News Release, please call us at 562-865-2727 or email us at info@ksgallp.com. 

KSGA, LLP