$27.6 Billion Budget Deficit Prompts California’s Move to Align Tax Deadlines with Federal Schedule

The aim is to align California’s tax deadlines with federal ones to manage the state’s budget deficit more effectively.

California Seeks Tax Deadline Control Amid $27.6 Billion Budget Deficit

Governor Newsom’s administration is asking for more power over tax deadlines wanting to shift control from the Franchise Tax Board to the Director of Finance. This request follows severe weather delays in 2023 that led to a six-month postponement of tax filing deadlines, according to the report of The Sacramento Bee.

The proposal comes after Newsom presented a revised budget aiming to address a $27.6 billion deficit through spending cuts, delays, and tapping into the rainy day fund. These measures are a response to the financial challenges posed by the storms which caused a significant delay in tax receipts, termed as a “blackout period.”

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(photo: KPBS)

California Proposes Tax Deadline Adjustments for Disaster Relief Amid Revenue Forecasting Challenges

Last year’s broad IRS tax delay affected the majority of California taxpayers prompting the need for a more streamlined approach. The proposed bill seeks to synchronize state tax deadlines with federal ones and introduce provisions for extending deadlines for taxpayers impacted by disasters providing flexibility during crises.

Delayed tax deadlines disrupted California’s revenue forecasting particularly as April typically sees the highest tax receipts. This led to challenges in accurately projecting income highlighting the need for greater adaptability. The proposal aims to empower the state to adjust tax deadlines in response to future delays.

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Furthermore, the Legislature will consider the proposed trailer bill as part of the state’s budget package this spring. Its passage would enhance California’s fiscal resilience against natural disasters. As lawmakers weigh this decision balancing fiscal responsibility with flexibility in times of crisis remains crucial.