May 31, 2023

California Extends PTE Tax Payments for Winter Storm Victims; Non-Residents Entities Still Need to Pay by June 15

By John Bonk, Partner, National Co-Leader - State & Local Tax & Zacarias Quezada, Manager, Tax & Business Services

California Extends PTE Tax Payments for Winter Storm Victims; Non-Residents Entities Still Need to Pay by June 15 State & Local Tax

Normally, California taxpayers must pay their first installment of the pass-through entity tax (“PTET”) by June 15. However, due to the severe winter storms that have affected California, the state has extended the deadline to October 16th, 2023, for California resident taxpayers. This extension is only available to resident taxpayers, and non-resident taxpayers must still pay their first installment by June 15. Taxpayers who fail to pay $1,000 or 50% of the elective tax paid in 2022 (whichever amount is greater) cannot make the PTET election on their 2023 California tax return.

The significance of this extension is not only that it alleviates the June 16, 2023, compliance requirement for qualifying taxpayers but puts much-needed liquidity back in qualifying taxpayer pockets and allows money earmarked for the initial 2023 PTE tax payment to be used to address some of the adverse economic effects of the winter storms.

As Governor Newsom expressed, “this extension offers much-needed relief to taxpayers impacted by these powerful storms” by way of providing taxpayers “[a]dditional time to file their California tax returns or make their quarterly estimated tax payment to the state.”

Of course, as with any emergency tax proclamation, taxpayer-specific items will require additional state guidance—as emergency relief measures are usually tailored to the public and often miss the nuances of tax rules/laws. All too often, taxpayers qualifying for tax relief under emergency measures need to communicate with the state to receive the additional guidance necessary to properly avail themselves of the relief offered.

California residents and businesses in Alameda, Alpine, Amador, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El Dorado, Fresno, Glenn, Humboldt, Imperial, Inyo, Kern, Kings, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, Monterey, Napa, Nevada, Orange, Placer, Plumas, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, San Luis Obispo, Santa Barbara, Santa Clara, Santa Cruz, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Ventura, Yolo, and Yuba counties who have been affected by the severe winter storms, flooding, and mudslides are eligible to remit their first PTET installment payment for the tax year 2023 by the October 16, 2023, extended due date. However, California resident taxpayers in Lassen and Shasta counties do not qualify for the relief.

Please contact your dedicated Marcum State and Local Tax Professional to address any questions regarding this notice or any other tax matter.