Tax Relief for those affected by California Wildfires

The ongoing destruction from wildfires and high winds in southern California is severe.

We, at ATLAS, are very sorry to hear of the numerous homes, businesses, and lives lost in this disaster.  We are here to help and support our clients as best we can, by providing updates that my affect you. If you know of anyone who may benefit from this information, please feel free to share this post with them.

** If you have been affected by the CA Wildfires, and feel the following information applies to you, please be sure to contact your tax preparer directly to let them know. **

January 8, 2025, the Federal Emergency Management Agency (FEMA) officially declared Los Angeles County a disaster area due to the wildfires. This declaration allows the IRS to postpone certain tax filings or deadlines for taxpayers — individuals and businesses — residing in the disaster area.

Therefore, on January 10th, the IRS announced tax relief for residents of Los Angeles county, by providing an automatic extension of time to file and pay, to October 15, 2025.

** Please continue reading for additional clarification of details. **

Generally speaking, automatic extensions only apply to filing due dates; with payment due dates remaining in tact. However, in this instance, payment due dates have also been extended, providing additional relief to those affected.

The following information comes from www.IRS.gov, announcement CA-2025-01 (linked here.)

Affected individuals and businesses will have until October 15, 2025, to file returns and pay any taxes that were originally due during this period [certain deadlines falling on or after January 7, 2025, and before October 15, 2025.]

The October 15, 2025, deadline applies to individual income tax returns and payments normally due on April 15, 2025.

This relief also applies to the 2024 [quarterly] estimated tax payment normally due on January 15, 2025; and [the 2025 quarterly] estimated tax payments normally due on April 15, June 16, and September 15, 2025.

Penalties on payroll and excise tax deposits due on or after January 7, 2025, and before January 22, 2025, will be abated as long as the tax deposits are made by January 22, 2025.

The October 15, 2025, deadline also applies to affected businesses, as follows:

• Quarterly payroll and excise tax returns normally due on January 31, April 30, and July 31, 2025 — now due by October 15, 2025.
• Calendar-year Partnership [1065] and S Corporation [1120-S] tax returns normally due on March 17, 2025 — now due by October 15, 2025.
• Calendar-year Corporation [1120] and Fiduciary tax returns [1041], and the corresponding tax payments, normally due on April 15, 2025 — now due by October 15, 2025.
• Calendar-year Tax-Exempt Organization [990] tax returns normally due on May 15, 2025 — now due by October 15, 2025.

If an affected taxpayer receives a late filing or late payment penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty.

The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. However, affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Following suit with this IRS, the Governor of California, Gavin Newsom, announced January 11, 2025, that taxpayers of Los Angeles County would also receive a postponement from the California Franchise Tax Board (FTB) on the filing of California state tax returns and remitting California state tax payments to October 15, 2025. The California tax relief aligns directly with those parameters established by the IRS, as outlined below. The following information comes from www.gov.ca.gov article, California provides tax relief for those affected by Los Angeles wildfires (linked here.)

The [California FTB] postponement [to October 15, 2025] includes the following:

• Individuals whose tax returns and payments are normally due on April 15, 2025.
• Quarterly estimated tax payments normally due on January 15, April 15, June 15, and September 15, 2025.
• Business entities whose corporate or pass-through entity tax returns are normally due on March 15 and April 15, 2025.
• Pass-through entity (PTE) elective tax payments normally due on March 15 and June 15, 2025.
• Tax-exempt organization returns normally due on May 15, 2025.

In addition to the providing Los Angeles Country taxpayers the benefit of an extension of time to file and pay, Governor Newsom secured a “major disaster declaration” from President Biden.  The advantage to having a presidentially declared disaster, is that taxpayers may be able to claim a deduction on their returns for disaster loss, with which the CA FTB can process and issue refunds sooner.

To read the articles referenced in this email, please follow the links above accordingly.