California offers additional tax relief, funding for small businesses amid COVID-19

California Gov. Gavin Newsom recently announced additional sales and use tax relief for small businesses economically impacted by the COVID-19 pandemic. At his instruction, the California Department of Tax and Fee Administration (CDTFA) is providing: 

1. An automatic three-month extension for CDTFA returns owing less than $1 million on payments and returns with an original due date between Dec. 1, 2020, and April 30, 2021. 

2. An opportunity to establish a 12-month interest-free payment plan to defer payment of up to $50,000 in sales/use tax liability for fourth quarter 2020 and first quarter 2021. The tax liability would have to be paid in twelve equal monthly installments starting in April 2021.

a. Eligible businesses include any business with annual taxable sales of $5 million or less, including businesses that already have an existing payment plan in place.

b. Businesses with taxable sales greater than $5 million that have been affected by operational restrictions due to COVID-19 are also eligible to apply for interest-free payment plans. “CDTFA will extend these payment arrangements to all businesses demonstrating a significant drop in sales, regardless of annual sales volume,” CDTFA said in a release.

Other relief programs currently available for California small businesses include:

1. The Small Business Hiring Credit (also referred to as the “Main Street” Small Business Hiring Tax Credit), as outlined in our previous tax alert.

2. A COVID Relief Grant of $500 million, administered by the California Office of Small Business Advocate (“OSBA”). See the Office’s website for specifics regarding the various types of assistance available.

3. The California Rebuilding Fund to help provide loans of up to $100,000 for impacted businesses. Find details and the pre-application here

What does CohnReznick think?

We recommend that small businesses significantly affected by COVID-19 operational restrictions utilize the CDTFA relief, immediately reserve the Small Business Hiring Credit, and proactively review other assistance available via state and local agencies.


Krista Schipp, CPA, Director, State and Local Tax Services


John On, Manager, State and Local Tax Services 


Mariam Memon, State and Local Tax Services


Subject matter expertise

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    Contact Corey Corey+Rosenthal
    Corey Rosenthal

    JD, Principal, Practice Leader, State and Local Tax (SALT) Services

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Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.