Beginning December 1, 2020 and continuing through January 15, 2021, CDTFA is accepting applications, through its online reservation system, for qualified small business owners to reserve up to a $100,000 hiring tax credit. The small business hiring tax credit provides a credit that a small business employer can use to offset their income taxes or their sales and use taxes when filing their tax returns.
The application requires the Full Time Equivalent (FTE) Employee Count between April 1, 2020 - June 30, 2020 compared to July 1, 2020 - November 30, 2020. Clients with access to a Payality online payroll system, can use the PPP FTE Look Back Period Report (Click Here for Instructions) to calculate the FTE for both periods. You may also request it from your Payality Client Support Specialist.
Interest-free deferral of sales/use tax up to $50,000 for businesses with less than $5 million in taxable sales.
Qualified small businesses can apply for a 12-month, interest-free payment plan to defer payment of up to $50,000 for 4th quarter 2020 and the 1st quarter of 2021 in sales and use tax liability. The deferred tax would be paid in twelve equal monthly installments, with the first payment not due until April 2021.
If you are experiencing a hardship as a result of COVID-19, you may request up to a 60-day extension of time from the EDD to file your state payroll reports and/or deposit state payroll taxes without penalty or interest. A written request for extension must be received within 60 days from the original delinquent date of the payment or return.
California excludes forgiven Paycheck Protection Program loans from state gross income
California has now passed Assembly Bill No. 1577, conforming to the PPP loan forgiveness rules. A.B. 1577 provide that gross income does not include any covered loan amount forgiven pursuant to Section 1106 of the CARES Act, pursuant to the Paycheck Protection Program and Health Care Enhancement Act, or pursuant to the Paycheck Protection Program Flexibility Act of 2020.
However, like current IRS rules, A.B. 1577 also denies business expense deductions for those expenses that were paid for using forgiven loan funds. Current stimulus negotiations in Congress include reversing this ruling by allowing these expenses to be deducted and if it passes, we are hopeful that California will also follow the federal guidelines.
