On May 6, 2020, California Governor Gavin Newsom issued Executive Order N-61-20, which provides relief from property tax penalties for taxes paid after April 10, 2020. The Order also provides that the 10% penalty and interest will not apply for failure to pay a property tax bill until May 6, 2021.
CGS3’s COVID-19 Legal Task Force compiled a summary of the key provisions of this Order:
- Penalty relief is available if all the following conditions are met:
- the property is either residential real property occupied by the taxpayer or real property that is owned and operated by the taxpayer that qualifies as a small business under Small Business Administration (SBA) 13 CFR Section 121.201;
- the property taxes were not delinquent prior to March 4, 2020;
- the taxpayer files a claim for relief in the form and manner prescribed by the local assessor; and
- the taxpayer demonstrates to the satisfaction of the tax collector that the taxpayer has suffered economic hardship or was otherwise unable to tender payment of taxes in a timely fashion due to the COVID-19 pandemic or any local, state or federal government response to COVID-19.
- Relief is not available for taxes paid through an impound account.
- Relief is also available to any taxes owed by taxpayer making installment payments.
- The same relief is available for failure to pay personal property tax to the extent that a penalty would have been imposed for failure to file a personal property tax statement before May 7, 2020 – provided it is filed before May 31, 2020.
- A small business under SBA Rule 121.201 depends on the business’s NAICS Code, which is generally industry specific. The SBA maintains size standards based on number of employees or annual receipts in the millions of dollars.
- Because of this, any individual taxpayer would need to consult the federal regulations to determine whether it is eligible for this relief.
It is important to note that uncertainty remains: the local assessor has yet to publish the form that necessarily must be filed for the claim for relief. In addition, it is unclear what the taxpayer needs to demonstrate that they “suffered economic hardship” or were “unable to tender payment of taxes in a timely fashion due to the COVID-19 pandemic.”
As always, please contact us should you need assistance navigating tax-related changes and determining the potential impacts on your business. Our COVID-19 Legal Task Force – comprised of multi-disciplined attorneys with expertise in real estate, finance, litigation, construction, tax, and creditor’s rights – is ready to assist you. Additionally, more articles and resources related to the pandemic can be found on our website at //cgs3.com/category/covid-19.
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