Governor Gavin Newsom issued executive orders May 6 extending the deadline for business owners to file business personal property (BPP) statements with county assessors, giving some residential and small business property owners an extra year to pay their real property taxes without penalty or interest, and making a change to the workers’ compensation system to presume that workers who contract COVID-19 did so on the job.
This week, the governor also announced plans to partially reopen the economy by allowing more businesses to open, providing they follow health precautions.
Under the executive order on property taxes, business owners have until May 31, 2020, to file their BPP statements without penalty. In a letter to the governor urging this relief, CalTax said the original May 7 deadline for BPP statements was very difficult – if not impossible – for many business owners to meet during a pandemic that restricts access to offices, files and accounting personnel. CalTax noted that under an extended filing deadline, employers will not receive a tax reduction, but simply will have the benefit of additional time to comply with tax laws without being penalized for circumstances that are out of their control.
The executive order also extends the deadline for paying property tax on real property, with restrictions designed to limit the benefit to homeowners and small business owners. Under the order, these property owners have until May 2021 to pay tax bills that were due last month.
Many county tax collectors have waived penalties and interest for late property taxes on a case-by-case basis. Newsom’s order still requires property owners to demonstrate “to the satisfaction of the tax collector” that there was an economic hardship that prevented timely payment, due to the COVID-19 pandemic. The order states that tax collectors shall cancel penalties, costs and interest provided all of these conditions are satisfied:
- Property taxes for the property in question are not paid through an impound account.
- The property is either residential real property occupied by the taxpayer, or real property owned and operated by a taxpayer that qualifies as a small business under the Small Business Administration’s Regulations, Code of Federal Regulations, Title 13, section 121.201.
- The taxes owed on the property in question were not delinquent prior to March 4, 2020.
- The taxpayer timely files a claim for relief in a form and manner prescribed by the tax collector.
- 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.
Additionally, taxes owed on a property by a taxpayer making payments pursuant to an installment plan under Revenue and Taxation Code section 4837.5 or Revenue and Taxation Code, Part 7, Chapter 3 (commencing with section 4186) shall not be considered delinquent if all payments required by the plan were current as of March 4.
During a May 6 press conference announcing the extensions, Newsom said the 10 percent penalty for failing to pay real property taxes by the April 10 deadline is very harsh, and he noted that “those property tax bills are so large” for many Californians.
On the same day, Newsom issued an executive order that makes it easier for employees classified as “essential workers” to qualify for workers’ compensation benefits by shifting the burden of proof to employers, who will have to prove employees did not contract COVID-19 at work in order to avoid a claim. The order applies to all essential workers, not just health care workers and first responders. It lasts for two months and retroactively covers those who tested positive for coronavirus within 14 days of working after Newsom’s original March 19 stay-at-home order.
California Labor Federation leader Art Pulaski said the order “adds a vital layer of protection to essential workers putting their lives at risk to provide for our families during this pandemic.”
Stuart Waldman, president of the Valley Industry and Commerce Association, said, “We fully understand why the governor wants to help Californians impacted by the coronavirus pandemic, but creating a rebuttable presumption shifts the burden to businesses who are struggling to keep their workers employed while also keeping their doors open.”
Waldman added: “The governor’s executive order opens up employers to significant abuse from employees. What’s to stop an employee who may have contracted COVID-19 as a consequence of congregating in public spaces, such as the beach, from receiving these benefits? Businesses already having a hard time making their payrolls will have to look at paying huge amounts in legal fees to pay for litigation.”