Actions aimed at limiting the spread of the novel coronavirus (COVID-19), such as California's state and local shelter-in-place orders, are causing significant disruption to normal business activity. As a result, disaster relief for 2020 assessments may be available to business personal property and real property taxpayers under California Revenue & Taxation Code (CRTC) Section 170 (Section 170). Depending on local county ordinances, assessment reductions may be available for damage caused by misfortune or calamity in an area subsequently proclaimed by the Governor to be a state of disaster. In some jurisdictions, "damage" may include a diminution in value caused by restricted access resulting from the misfortune or calamity.

Section 170 claims generally must be filed within 12 months of the misfortune or calamity causing the damage. A written appeal must be filed with the county assessor stating the condition and value of the property immediately before and after the damage. Given the timing of the shelter-in-place orders, disaster relief claims may allow California property taxpayers to provide evidence of market value well beyond the January 1 lien date, potentially obtaining reductions for the 2020 assessment year that would otherwise be unavailable.

Implications

Taxpayers are encouraged to work proactively with the local assessor for the best outcome. In general, property taxes must be paid while claims are pending, but limited exceptions for real property tax deferment may be available under CRTC Section 194 if requested in conjunction with a Section170 claim. Given the uncertainty surrounding the current COVID-19 pandemic situation, regular roll appeals for the 2020 and 2021 lien dates should also be filed to fully preserve taxpayer rights.

EY is ready to assist taxpayers in this process and will monitor this development and issue additional Tax Alerts as warranted. California state and local jurisdictions have offered specific property tax relief for disasters in the past, and a similar, if not more robust, response is expected for the COVID-19 emergency.

———————————————