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:

  1. The real property is owner-occupied residential property or owner-occupied “small business” property (this includes wineries with up to 1,000 employees);
  2. The taxes owed were not delinquent on March 4, 2020;
  3. The taxpayer timely files a claim for relief on a form prescribed by the county tax collector; and
  4. “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.

For additional information on potential COVID-19-related relief of penalties for late payment of property taxes, please contact Carol Kingery Ritter or Owen Dallmeyer.