Should your non-profit use the tax or tax filing relief available for non-profits doing business in counties which experienced severe winter storms in California?
President Biden declared certain counties in California impacted by the winter storms to be eligible for various disaster relief benefits on January 8, 2023.
In this article, we are going to focus on the tax benefits, rather than the direct relief benefits that may be available through FEMA. Whether or not you directly experienced the impact of the storms, if you live or work in these counties, you are eligible for tax benefits in the form of either delayed filings, delayed payment of taxes or both. In late January, IRS tax filings (and certain tax payments) were delayed until October 16, 2023. Recently, Governor Gavin Newsome synchronized State of California tax filings due dates for the same list of counties (tax payment status is not clear) to the same October 16, 2023 date.
The IRS provided this list of returns that can be delayed (emphasis added):
Under section 7508A, the IRS gives affected taxpayers until Oct. 16, 2023, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; annual information returns of tax-exempt organizations; and employment and certain excise tax returns), that have either an original or extended due date occurring on or after Jan. 8, 2023, and before Oct. 16, 2023, are granted additional time to file through Oct. 16, 2023. (Source)
Any Forms 990 coming due before October 16, 2023 are postponed to October 16, 2023. Any federal payments that would have been due before October 16 are not due until October 16. Payroll tax deposits and excise taxes are not impacted by the delay in due dates and generally penalties will apply for these according to usual practices and schedules.
For example, if you are a non-profit and your fiscal year end was December 2022, your basic Form 990, which would otherwise would have been due on May 18, 2023, is not due until October 16, 2023. This includes other Form 990 tax forms that non-profits file such as the unrelated business income tax form (Form 990-T).
Non-profits should be sure that their employees know that individual tax forms are likewise delayed, along with any payments due, if they live or work in affected counties. Contributions to IRAs and health savings accounts are likewise able to be made for the year 2022 as late as October 16, 2023.
Should your Non-Profit delay filings?
Here are a few other considerations to help your nonprofit think this through:
If you owe taxes for a Form 990-T, this could assist your organization with cash flow for a few months. However, the vast majority of Forms 990 are informational filings only, so that is unlikely to be a benefit to most non-profits.
It is possible these provisions will create a backlog given the number of non-profits required to file Form 990. Talk to your tax accountant if you should remain on your “usual” schedule for filing to avoid delays in filing that could occur in October.
If your tax preparer also files your annual statements due to the state of California (attorney general registrations, required annual audits for organizations with public revenues over $2 million (which often precede filings of Form 990) biannual form SI-100s, etc.) then you should ensure those proceed according to the scheduled due date. We are not aware of these due dates having changed.
Charity Navigator, Guidestar, and other charity rankers use the information on your Form 990 to rate your nonprofit. Whether such delay is good for your organization or bad for your organization depends on the perceptions of your major donors/grantors/volunteers and other constituents.
If you are presently struggling to close/audit your books for a fiscal year ending from December 2022 - March 2023, this could give you a little additional time and avoid restatements, which never look good for a non-profit.
There does not appear to be any reason to delay payroll or excise tax filings as deposits remain due as originally scheduled.
We are not tax advisors, but are happy to connect our business partners to tax advisors to assist in planning if your non-profit or faith inspired non-profit has questions! Contact our team to get started!
Resources:
See the list of eligible counties in the link below, and note that Los Angeles and many counties up and down the California coast are included.
Counties in California benefiting from the delayed federal and state tax filings: https://www.fema.gov/disaster/4683/designated-areas
Counties in Alabama benefiting from delayed federal tax filings: https://www.fema.gov/disaster/4684/designated-areas