16 January 2025

IRS and California provide tax disaster relief for victims of California wildfires

The IRS has extended (IR 2025-10) the due dates for filing individual and business tax returns and making tax payments to October 15, 2025, for taxpayers affected by wildfires and straight-line winds that began on Jan. 7, 2025.

The extension applies to taxpayers, including tax-exempt organizations, that reside or have a business in the federally declared disaster areas in Los Angeles County, California. Taxpayers that are not located in the disaster area but have records there may also qualify for the extension. Taxpayers without a recorded address in the disaster area may still qualify for penalty abatement resulting from a late filing or payment notice. Affected taxpayers should contact the IRS to determine if their circumstances and situation warrant penalty abatement.

The postponement until October 15, 2025, applies to various individual and business filings and payments, including:

  • Individual and business income tax returns and payments with an original due date of April 15, 2025
  • Exempt organization returns with an original due date of May 15, 2025
  • Quarterly estimated income tax payments normally due on January 15, 2025, and estimated tax payments normally due on April 15, June 16 and September 15, 2025
  • Quarterly payroll and excise tax returns normally due on January 31, April 30 and July 31, 2025
  • 2024 contributions to IRAs and health savings accounts for eligible taxpayers

The IRS will also abate penalties on payroll and excise tax deposits due on or after January 7, 2025, and before January 22, 2025, so long as payment is made by January 22, 2025. The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

Taxpayers in the federally declared disaster area may claim uninsured or unreimbursed disaster-related casualty losses on either their 2025 or 2024 federal income tax return. Taxpayers claiming a disaster loss due to a federally declared disaster should include the FEMA declaration number on the top of the first page of any return claiming a loss.

California filing extensions for wildfire victims

The California Franchise Tax Board posted fire relief on its website detailing that Los Angeles County individuals and businesses impacted by the fires qualify for a postponement to file, and to pay taxes, until October 15, 2025.

The postponement to October 15, 2025, applies to:

  • 2024 individual income tax returns and payments normally due on April 15, 2025
  • Quarterly estimated tax payments normally due on January 15, April 15, June 15, September 15, 2025
  • Calendar-year 2024 partnership, limited liability company, and S corporation tax returns and payments normally due on March 15, 2025
  • Calendar-year 2024 corporate and fiduciary income tax returns and payments normally due on April 15, 2025
  • Calendar-year 2024 returns filed by tax-exempt organizations normally due on May 15, 2025
  • Passthrough Entity Elective Tax payments normally due on March 15 and June 15, 2025

The California Franchise Tax Board has also posted a frequently asked questions website related to the fires called Help with Los Angeles County fire relief | FTB.ca.gov.

California employers affected by a declared state of emergency may request an extension of up to two months to file their state payroll reports and deposit state payroll taxes with the California Employment Development Department, without penalty or interest.

Payments that qualify for the extension are the unemployment insurance tax, employment training tax, state disability insurance and personal income tax. Information on how to file a request for extension can be found here.

Sales and use tax relief

The California Department of Taxes and Fees (CDTFA) on January 13, 2025, announced that it would provide an automatic three-month extension to April 30, 2025, of the January 31, 2025 deadline for filing sales and use tax returns and making payments to Los Angeles County taxpayers whose last return was for less than $1m in tax. This includes sales and use tax, as well as most other programs administered by CDTFA. A full list of taxes that qualify for filing and payment relief can be found here.

CDTFA added that while the extension was automatic only for Los Angeles County taxpayers below the $1m threshold, it will continue to consider relief and extension to those above the $1m threshold and those beyond Los Angeles County (e.g., Ventura County) upon request.

California disaster unemployment assistance

Individuals who lost their job or are unable to work because of the Los Angeles County wildfires may be eligible for disaster unemployment assistance or disability/paid family leave benefits.

More information is available here.

Qualified disaster relief payments

Under IRC Section 139, taxpayers may exclude from their gross income certain payments to individuals to reimburse or pay for expenses related to a qualified disaster. IRC Section 139(b) defines a qualified disaster relief payment as "any amount paid to or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster."

Taxpayers should note that qualified leave wages, such as paid sick leave or other paid time off, do not qualify as excludable disaster relief payments under IRC Section 139, because qualified disaster relief payments do not include income replacements.

Taxpayers should be aware that while qualified disaster payments are not subject to California personal income tax withholding or reporting, payments made by an employer are subject to unemployment insurance tax, employment training tax and state disability insurance withholding.

Implications

Individuals and businesses, including tax-exempt organizations, affected by the Los Angeles County wildfires should verify their eligibility before relying on the October 15, 2025 postponement period for extended filing and payment deadlines. Taxpayers may qualify for relief despite having an address outside the disaster areas if they do business or keep records in the disaster area; such taxpayers should consult the disaster relief website of the IRS and their tax advisors. As the Los Angeles County wildfires are ongoing and additional relief may be warranted, taxpayers should monitor the IRS Disaster Relief website and California FTB and EDD websites for changes to impacted geographic areas, extended due dates and potential filing and tax payment implications.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

Tax Exempt Organizations Services

Workforce Tax Services - Employment Tax Advisory Services

State and Local Income Tax

Sales and Use Tax

Business Tax Compliance

Published by NTD’s Tax Technical Knowledge Services group; Chris DeZinno, legal editor

Document ID: 2025-0248