Potential Penalty Relief for Late Property Tax Payments Related to COVID-19
Property owners who missed the April deadline for paying the second installment of real property taxes because of the COVID-19 pandemic may be eligible for relief from late payment penalties. But to get this relief, you may need to act soon.
ALERT: On May 6, 2020, Governor Newsom issued Executive Order N-61-20, directing county tax collectors to waive, until May 6, 2021, all penalties, costs, and interest for late payment of the second installment of property taxes under the following conditions:
- The real property is owner-occupied residential property or owner-occupied “small business” property (this includes wineries with up to 1,000 employees);
- The taxes owed were not delinquent on March 4, 2020;
- The taxpayer timely files a claim for relief on a form prescribed by the county tax collector; 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.”
As a result of Executive Order N-61-20, county tax collectors may revise the application forms, deadlines, and review process referenced below, so taxpayers should check the website of their county tax collectors for more information. A link to a list of all county tax collectors and their websites is below.
The second installment of real property taxes was due April 10, 2020. Missing that deadline normally results in a penalty of 10% of any unpaid taxes, and monthly interest of 1.5% also starts accruing on July 1. But, in light of the global COVID-19 pandemic, county tax collectors have indicated a willingness to cancel penalties where the failure to pay by the deadline “is due to reasonable cause and circumstances beyond the taxpayer’s control, and occurred notwithstanding the exercise of ordinary care in the absence of willful neglect.” This authority arises under Revenue and Taxation Code Section 4985.2(a), which allows tax collectors to cancel penalties, costs, and charges resulting from tax delinquency under certain circumstances.
While this is welcome news, tax payers should be aware that the grounds for relief are narrow, the current deadlines are tight (with Napa County’s application for penalty relief due on May 15, 2020), and all delinquent taxes will need to be paid to be eligible for penalty relief.
For example, Sonoma County’s tax collector had, before the governor’s executive order, issued guidelines providing that potential penalty relief requires that the property owner (“Owner”) sign a declaration under penalty of perjury that:
(a) Failure to make a timely payment is due to Owner’s experience of at least one of the following circumstances:
(i) A medical condition directly related to the COVID-19 disease;
(ii) The County Health Officer’s COVID-19 Shelter-in-Place Order No. C19-03, as amended by Order No. C19-05, (“Order”) precluded Owner from working or generating sufficient revenue/income, resulting in severe economic hardship;
(iii) Other reasonable cause or circumstance directly related to COVID-19 and/or the Order;
(b) The circumstance was beyond Owner’s control;
(c) Failure to make a timely payment occurred despite Owner’s exercise of ordinary care and without willful neglect.
Under the latest executive order, all counties will be able to use the same standard of impacts from COVID-19. Applicants will need to provide documents supporting their claim for relief.
Currently, deadlines to request relief are approaching, though those deadlines may change with the governor’s executive order. Napa County requires COVID-19-related penalty relief applications be filed by May 15, 2020, while Sonoma County property owners have until June 10, 2020 to file applications. Napa County does not require payment with the application, but if relief is granted, requires payment by June 10, 2020. In contrast, Sonoma County requires payment with the application. It is important to note that relief only applies to late payment of the second installment of property taxes; payment in full of any prior tax delinquencies plus applicable penalties and interest is required with the application in order to be eligible for relief.
Below are links, from prior to the governor’s order, to information and application forms for COVID-19-related late payment penalty relief, listed in order of the application deadlines.
- Napa County (Filing Deadline: May 15, 2020)
- Tax collector webpage on COVID-19, with links to FAQs and COVID-19 penalty relief application form.
- Payment deadline: June 10, 2020
- Sonoma County (Filing Deadline: June 10, 2020)
- Tax collector webpage on COVID-19, with links to COVID-19 penalty relief guidelines and application form.
- Payment required with application filing.
- Lake County (Filing Deadline: June 30, 2020)
- Tax collector webpage with links to COVID-19 FAQs and COVID-19 penalty relief application form.
- Payment required with application filing.
- Mendocino County (Filing Deadline: June 30, 2020)
- Tax collector webpage with link to COVID-19 penalty relief application form.
- Payment required with application filing.
For counties not listed above, a list of the websites for all California county tax collectors can be found here.
Highlights of Napa County’s Updated Shelter in Place Order Including Cloth Face Covering Requirement
Here are the key changes in the new Order:
- The Order requires wearing cloth face coverings when inside places of business and in workplaces when interacting with any person where six feet of physical distancing cannot be maintained.
- A Face Covering is Not Required When: at home; in your car alone or solely with members of your household; exercising outdoors provided you are staying at least six feet apart from anyone who is not a member of your household (but it is recommended that you have a face covering with you and readily accessible); when eating or drinking.
- Who Should Not Wear a Face Covering: Children 6 years old or younger may not need a face covering and children under 2 should not wear one; anyone who has trouble breathing or is unable to easily remove a face covering without assistance; anyone who has been advised by a medical professional not to wear a face covering.
- Essential businesses must require their employees wear a face covering in any area where others may be present, even if there are no customers or members of the public present at the time. Essential businesses should inform customers about the requirement of wearing a face covering, including posting signs at the entrance to the store or facility.
- All workers operating public transportation, or operating other types of shared transportation are required to wear a face covering when at work in most settings.
- Workers doing minimum basic operations, like security or payroll, essential infrastructure work, or government functions should wear a face covering when six feet of physical distance cannot be maintained.
- For more information on cloth face coverings, including links to guidance on how to make your own mask, see the Napa County requirement here.
- The Order states that businesses will be permitted to reopen within the State of California’s framework that identifies four-stages to reopening.
- Non-essential businesses will be permitted to reopen according to the State’s four-stage framework. It is anticipated that Early Stage 2 non-essential businesses may be able to open as early as Friday, May 8, 2020. The list of those businesses, and how they will be allowed to operate, will be provided by the State.
- Counties may be able to move into Deep Stage 2, but only after the State Public Health Officer provides criteria and procedures for doing so, as well as the template for submitting a “readiness plan” that requires self-certification by the Public Health Officer and approval by the Board of Supervisors.
- Stage 3 non-essential businesses will not be able to reopen until the Governor determines, on a statewide basis, that counties can move into Stage 3. The Governor has also said this stage is months away.
- The Order allows drive-in activities that can comply with physical distancing requirements.
- All construction is now allowed but it must comply with Construction Site Requirements to maintain social distancing and sanitation (see Appendix B to the Order).
- The Order allows outdoor recreation sports that can comply with physical distancing requirements; however, person-to-person contact sports are still prohibited.
- The list of approved outdoor recreation activities can be found here.
- Golfing, use of tennis courts, and use of swimming pools (public and semi-private) are permitted as long as they are used in compliance with social distancing protocols. (The specific, detailed requirements for golf courses remain the same – see Appendix C of the Order).
- You can exercise outdoors if you will not be in close contact with other people or using equipment that other people outside your household have touched. Fitness centers, gyms, recreational centers, fitness equipment at parks, climbing walls, basketball courts, and other shared sports facilities remain closed.
- Comment on the Short-Term Lodging Industry
- The Napa County Public Health Officer has advised the lodging industry that reservations beginning on and after June 1, 2020 may be accepted. However, this is not a guarantee that the reservations can be honored, and short-term lodging businesses should inform customers that their reservations will be cancelled if the local and/or state Shelter-At-Home orders continue to prohibit short-term lodging at that time. Further, lodging businesses should consider how they will provide appropriate sanitation and enforce physical distancing protocols when they are allowed to reopen.
- The Compliance Task Force will not engage in enforcement activities for lodging businesses that are currently accepting reservations for dates beginning June 1, 2020 and beyond, but making new reservations for dates in May is still prohibited and subject to enforcement.
For more information please contact Marissa Buck.
CA ABC and TTB Provide Guidance to Wineries on Virtual Tastings
In light of the wide-spread shut-downs and disruptions resulting from the Covid-19 pandemic, both the California Department of Alcoholic Beverage Control and the Alcohol and Tobacco Tax and Trade Bureau have recently provided guidance to wineries that are now venturing into the new world of “virtual” wine tastings that occur online.
ABC’s latest Notice of Regulatory Relief on Virtual Wine Tastings, issued on Friday April 24, provided certain guidelines for wineries conducting such virtual tastings while their licensed wine premises or tasting rooms are closed:
- Samples or tastes for wine tastings cannot be given for free to consumers. Such samples or tastes must either be sold to the consumer, or included as part of a sale of wine or other products to the consumer.
- Any wine shipped to consumers, including small tasting samples, must be sent in a manufacturer sealed container.
- While there are no limits on the size of the tasting sample, any containers in which the tasting samples are sent must meet the federal regulatory guidelines for both labeling and standards of fill and any applicable state labeling regulations.
- Acceptable standards for fill for wine under federal law include the following: 3 Liters, 1.5 Liters, 1 Liter, 750ml, 50ml, 375ml, 187ml, 100ml (3.4 fl. oz.) and 50ml (1.7 fl. oz).
- Importantly, this means that shipping “tastes” to consumers in small vials that do not meet the above criteria would not be legal under federal or state law.
- Such shipments are subject to sales and/or other applicable taxes, just as typical direct to consumer sales would be.
- In accordance with ABC’s previous regulatory guidance, ABC is temporarily allowing the free shipment of wine to consumers, including samples for virtual wine tastings, during the Covid-19 emergency.
- Finally, it should be noted that the ABC’s latest Notice of Regulatory Relief specifically applies to the sale and shipping of wine and tasting samples within California. Any sales and shipments of wines, including tasting samples, to consumers outside of California will need to comply with the laws of the applicable state to which the wines will be shipped.
The full text of the Third Notice of Regulatory Relief can be found here.
In response to an inquiry by Wine Institute, TTB provided guidance regarding virtual tasting samples being provided by wineries to consumers. (see – https://wineinstitute.org/news-alerts/tasting-samples-for-virtual-winery-experiences-approved-by-ttb/ )
Per Wine Institute, TTB has stated that it will treat these wines just like any other taxable removals, subject to standard production and labeling requirements, payment of excise tax and applicable reporting. TTB’s guidance included the following:
- As noted above, samples must be provided in an approved standard of fill.
- Wine tasting containers must be properly labeled.
- If the tasting sample is a wine that already has an approved Certificate of Label Approval (“COLA”), the winery is permitted to change the net contents on the wine as an allowable revision without having to submit a new COLA. If no COLA was previously obtained, the winery must apply for and obtain COLA approval prior to labeling of the wine tasting sample.
- As a reminder, domestic wines must include the following information on the brand or back label as required under the regulations: Brand name, Class and type designation, Appellation of origin (if required), Alcohol content, Bottler’s name and address statement, Government health warning statement, Net contents and Sulfite declaration. Assuming that the tasting samples being sent to consumers are in containers smaller than 187ml, please note that the minimum type size for all of the foregoing under federal regulations is 1mm.
- As noted above, wines use for tasting samples are treated just like any other removals for sales or consumption – the wines must be tax paid, all required records must be kept and all required reports must be filed. Shipments of these containers must be treated the same as other types of removals from bond – for example, the wine must be tax-determined, and wineries must maintain the required removal from bond records.