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CDTFA Offers Immediate Interest-Free Payment Plans

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Small businesses may defer up to $50,000 of sales and use tax liability for 12 months

Governor Newsom has announced a new relief effort that gives all businesses with less than $5 million in annual taxable sales the ability to defer payment on up to $50,000 in sales and use tax liability without incurring any penalties or interest. The announcement builds on Executive Order N-40-20, issued by the governor on March 30, 2020, which provided all small business taxpayers an additional 90 days to file and pay taxes administered by the California Department of Tax and Fee Administration (CDTFA).

Under the new program, qualifying businesses can enter into payment plans to distribute up to $50,000 of sales tax liability over a 12-month period, interest-free. For taxpayers choosing to defer their 1st quarter 2020 liability, for example, up to $50,000 of the obligation would now be paid in 12 equal monthly installments, with the first payment not due until July 31, 2020.

“Small businesses are the backbone of California’s economy. Our hope is that these interest-free payment plans provide a much-needed bridge until small businesses can get up and running,” stated Director Nick Maduros. “The Governor’s action today allows small business owners to spread out their financial obligations over a full year, without paying any interest or penalties.”

Businesses not within these parameters can contact our CDTFA Customer Service Center at (800) 400-7115 or their local CDTFA office. CDTFA retains administrative flexibility to assist businesses needing relief in the case of disasters.

The payment plans are in addition to the previous assistance CDTFA has rolled out to small businesses for any taxes and fees administered by CDTFA:

  • Providing a three-month extension for a tax return or payment to any businesses filing a return for less than $1 million in tax. For the approximate 99.5% of business taxpayers below the $1 million threshold for their current California sales and use tax obligation, returns for the 1st quarter 2020 will now be due on July 31, 2020.
  • All businesses will have an extra 60 days to file claims for refund from CDTFA or to appeal a CDTFA decision to the Office of Tax Appeals.

Additional information on the relief offered can be found at cdtfa.ca.gov/services/covid19.htm. For information about California’s COVID-19 efforts, visit covid19.ca.gov.

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