Tax News February 2025

Tax News Flash – Emergency Tax Relief for Los Angeles County Fires

Individuals and businesses with their principal residence or principal place of business in Los Angeles County during the Los Angeles County fires that began on January 7, 2025, qualify for a postponement to file and pay taxes until October 15, 2025.

We updated our webpages to provide additional information:

• Emergency tax relief
• Los Angeles County fires
• Help with Los Angeles County fire relief
• Disaster declaration tax payments

Los Angeles County Disaster Assistance

We compiled information to provide the most up-to-date information available for taxpayers, tax professionals and their clients affected by the Los Angeles County disasters.

Los Angeles County individuals and businesses with their principal residence or principal place of business in Los Angeles County during the fires that began on January 7, 2025, qualify for a postponement to file and pay taxes until October 15, 2025. Los Angeles County taxpayers should write the name of the disaster at the top of their tax return (e.g., LA County Fires). If taxpayers file electronically, they should follow their software instructions to enter disaster information.

Los Angeles County individuals and businesses who have questions on disaster relief may contact us using one of the following methods:

Web

Check MyFTB for up-to-date account information.

• If you or your client do not have a MyFTB account, now would be a good time to create an account.

Phone

888-825-9868

Email

FTBLACountyDisasterRelief@ftb.ca.gov

The phone number and email address options above are only for individuals and businesses affected by the Los Angeles County disaster.

If you or your clients have questions on the Los Angeles County disaster relief, provide:

• Taxpayer name
• Address during disaster (must be principal residence or principal place of business)
• Email address
• Telephone number
• 10-digit FTB identification number

Do not include social security numbers or any other confidential information in the email. Please allow up to 2-3 weeks for an email response. We will only respond to emails related to the Los Angeles County disaster through this mailbox.

If you have questions not related to the Los Angeles County fires, you may use one of the many options to contact FTB.

San Diego County Flood Relief Reminder

Individuals and businesses with their principal residence or principal place of business during the San Diego County floods that began on January 21, 2024, and who made quarterly estimated tax payments (normally due on April 15, and June 15, 2024), on or before June 17, 2024, should write the name of the disaster (for example, San Diego Flood) at the top of their 2024 taxable year return in blue or black ink.

If taxpayers file electronically, they should follow their software instructions to indicate the return qualifies for disaster relief.

Refer to Help with San Diego County flood relief for additional information.

New Form FTB 3872 – California Disaster Relief Request for Postponement of Tax Deadlines

Beginning on or after June 27, 2024, the Director of Finance shall determine when Internal Revenue Code Section 7508A, related to postponement of certain federal tax-related deadlines, applies for California purposes to a taxpayer affected by a state of emergency declared by the Governor or a federally declared disaster.

Taxpayers affected by California disasters declared by the President and/or the Governor should write the name of the disaster in blue or black ink at the top of their tax return when the return is filed with the Franchise Tax Board (for example, Boyles Fire).

Impacted taxpayers can request an additional relief period if the state postponement period expires before the federal postponement period by filing form FTB 3872, California Disaster Relief Request for Postponement of Tax Deadlines.

If taxpayers file electronically, they should follow their software instructions to enter disaster information.

For more information, refer to California Revenue and Taxation Code Section 18572.

For additional information, go to 2024 Instructions for Form FTB 3872 and 2024 Form FTB 3872.

New and Enhanced Self-Service Features

FTB designed new and enhanced self-services in collaboration with our tax practitioner community and industry partners like you. Your feedback provided our team of experts the ability to evaluate and make design enhancements before implementation. We are excited about these features and look forward to sharing additional self-services as they launch.

Enhancements

• Payment Plan Application allows personal income taxpayers the ability to request and manage their existing agreements, including updating their electronic payment information through their MyFTB account.
  Go to Payment Plans for more information. 
• Request Bill Delay Service has a more user-friendly interface. This service is available to taxpayers only.
  Go to Delay my bill payment for more information. 

New Features

• FTB-issued lien information is now available in MyFTB for individual taxpayer accounts. The information includes the date issued, certificate number, tax years, original lien amount, lien status, and a copy of lien notice. Additional details include who the lien was filed/recorded with, the taxpayer information on the lien, the release date (if status = released), and any extension information. Individuals and tax professionals with full online account access can view this information.
• FTB-issued levy/withholding order information is now available in MyFTB for individual taxpayer accounts, including information pertaining to Earnings Withholding Order for Taxes (EWOT), Continuous Order to Withhold (COTW), and Order to Withhold (OTW).The information provided includes the type of withholding order, date issued, payer, original order amount, and order status (for example, if it is released). Additional details include taxable years, payer information/response, and modification/delay history (if applicable).

Individual taxpayers and their POA representatives can request a modification to an EWOT or COTW through MyFTB. (OTWs cannot be modified online.) To request modification of an order online, the following must be true:

• Order status is Active.
• Order has not been previously modified.
• Total balance must be less than $25,000.
• Case is not assigned to a collector.
• There is only one “Active” order.

How to Request a Withholding Order Modification in MyFTB:

1. Log in to MyFTB and select FTB-Issued Withholding Orders from the Account menu.
2. Select the order you wish to modify.
3. Complete the worksheet to calculate disposable earnings.
4. Propose the new withholding amount.
5. If we do not approve the new amount, you may propose a different amount.
6. If we approve the new amount, you must confirm the modification in order for the modification to take effect. We will mail the modification information to the employer within five business days.
   1. Requester can provide employer’s fax number for quicker notification.

File for Free with IRS Direct File and FTB CalFile

IRS Direct File is a free service that allows eligible taxpayers to electronically file their federal tax return directly with the IRS. Direct File works well on a mobile phone, laptop, tablet, or desktop computer. In early 2025, IRS Direct File will open for filing and service will be available to eligible taxpayers residing in 25 participating states, including California. Eligibility for IRS Direct File depends on certain income types, deductions, and credits. Most taxpayers who use Direct File should also qualify to use CalFile.

For more information, go to IRS Direct File.

CalFile is California’s free e-filing service for state tax returns. The CalFile application launched nearly 16 years ago and is fast, easy, and free. It is available to California taxpayers who meet specific income and filing criteria.

To use CalFile, taxpayers must first create a MyFTB account. Most people can create a MyFTB account in real-time and take advantage of the many benefits including online access to tax account information and helpful online services. Once logged in with MyFTB, eligible taxpayers can file their California tax return in a safe environment. Taxpayers will receive real-time confirmation once they submit their return.

For more information, go to CalFile Qualifications.

Report Certain Deductions, Credits, Exclusions, and Exemptions

We want to remind you of the reporting process for clients who take certain deductions, credits, exclusions, and exemptions. If you have clients with any of the following reported on their tax return, be prepared to fill out Form 4197 which you can email to request with the link provided:

• Cannabis (CBIS)
• Paycheck Protection Program (PPP)
• Other Loan Forgiveness (OLF)
• Economic Injury Disaster Loan (EIDL)
• Restaurant Revitalization Grant (RRG)
• Shuttered Venue Operator Grant (SVOG)
• Deployed Military Exemption (DME)
• Thomas and Woolsey Wildfires Exclusion (TWWE)
• Turf Replacement Water Conservation Program Exclusion (TRWCP)
• Emergency Financial Aid Grants (EFAG)
• ARPA Student Loans Forgiveness (ARPSLF)
• Kincade Wildfire Exclusion (KWE)
• Zogg Wildfire (ZWE)
• Wildfire Mitigation Payment (WMP)

The legislature specifies the metrics used to evaluate the programs and occasionally requires metrics currently not reported on the state tax return. As a result, FTB uses Form 4197 to capture the information necessary to report these metrics in legislatively mandated reports. Taxpayers must submit Form 4197 in addition to any other credit forms or expense schedules required to be filed with their tax return.

Below is a table to provide guidance on how to complete the form:

Tax Expenditure Item	Code - Enter in column (a)	Additional Columns Requested
Thomas and Woolsey Wildfires Exclusion	TWWE	Enter amount in column (e) – Exclusions
Deployed Military Exemption	DME	Enter in column (g) the number of employees (including yourself) that the corporation or the LLC employed
Cannabis	CBIS	Complete Part I, columns (a), (c), and (d) (If deductions apply, complete column (b))
Shuttered Venue Operator Grant	SVOG	Enter amount in column (e) – Exclusions
Economic Injury Disaster Loan	EIDL	Enter amount in column (e) – Exclusions
Turf Replacement Water Conservation Program Exclusion	TRWCP	Enter amount in column (e) – Exclusions
Emergency Financial Aid Grants	EFAG	Enter amount in column (e) – Exclusions
ARPA Student Loans Forgiveness	ARPSLF	Enter amount in column (e) – Exclusions
Kincade Wildfire Exclusion	KWE	Enter amount in column (e) – Exclusions
Zogg Wildfire	ZWF	Enter amount in column (e) – Exclusions
Paycheck Protection Program	PPP	Enter amount in column (e) – Exclusions
Restaurant Revitalization Grant/Restaurant Revitalization Fund	RRG	Enter amount in column (e) – Exclusions
Wildfire Mitigation Payment New as of TY 24	WMP	Enter amount in column (e) – Exclusions
Other Loan Forgiveness	OLF	Enter amount in column (e) – Exclusions

For more information and instructions on Form 4197 and other forms, go to the Forms section.

View previously released reports Data, reports, and plans.

Attend a Virtual Withholding Presentation

We offer two 25-minute virtual withholding presentations followed by a Question-and-Answer session conducted through Microsoft Teams or Zoom.

California Nonresident Withholding

Held the second Wednesday of each month beginning at 10 AM.

We will review:

• California nonresident withholding requirements
• Income subject to withholding
• Withholding agent requirements
• Withholding exceptions, waivers, and reductions
• Withholding liability and penalties
• Resources

To attend this presentation, email us at FTBCANonResidentWithholdingEducation@ftb.ca.gov.

California Real Estate Withholding

Held the third Tuesday of each month at 10 AM.

We will review:

• Real estate withholding requirements
• Common mistakes made on Form 593, Real Estate Withholding Statement
• Withholding responsibilities
• Installment sales
• Trusts
• Foreign sellers
• LLCs
• Resources
• Questions

To attend this presentation, email us at FTBRealEstateEducation@ftb.ca.gov.

For the latest information, Subscribe to nonresident withholding and real estate withholding.

Request a Speaker

As part of our ongoing Education and Outreach efforts, representatives from the Taxpayers’ Rights Advocate’s Office are available to provide virtual and limited in-person presentations to tax professionals, government and nonprofit organizations, and community groups on a variety of tax-related topics.

Our Small Business Liaison presents to small business owners to help them better understand their income tax requirements and responsibilities. Our liaison offers valuable insights on the different types of ownership to allow business owners to determine which form of ownership best fits their business needs.

You may request an in-person presentation. We will evaluate in-person presentation requests on a case-by-case basis. The in-person presentations are limited to groups of 25 or more and we ask that all requests be made at least 30 days prior to the event. Our presenters can adjust the topic to fit your needs, but we cannot present more than two-hours. Our presentations are not intended as courses or classes to meet the needs of continuing education requirements.

Go to Request a Speaker for additional information and to schedule a presentation.

Internal Revenue Service (IRS) Updates and More

We partnered with the IRS to provide monthly IRS articles to assist our tax professional and small business communities. We are excited to share this information; however, questions about the content, should be directed to the IRS.

IRS: California wildfire victims qualify for tax relief; various deadlines postponed to Oct. 15

IR-2025-10, Jan. 10, 2025 — The IRS announced tax relief for individuals and businesses in southern California affected by wildfires and straight-line winds that began on Jan. 7, 2025.

IRS announces Jan. 27 start to 2025 tax filing season; agency continues historic improvements to expand, enhance tools and filing options to help taxpayers

IR-2025-08, Jan. 10, 2025 — The IRS announced that the nation’s 2025 tax season will start on Monday, Jan. 27, 2025, and will feature expanded and enhanced tools to help taxpayers as a result of the agency’s historic modernization efforts.

Treasury, IRS issue proposed regulations on new Roth catch-up rule, other SECURE 2.0 Act provisions

IR-2025-07, Jan. 10, 2025 — The Department of the Treasury and the IRS issued proposed regulations addressing several SECURE 2.0 Act provisions relating to catch-up contributions, which are additional contributions under a 401(k) or similar workplace retirement plan that generally are allowed with respect to employees who are age 50 or older.

Treasury and IRS issue final rules identifying certain partnership related-party "basis shifting" transactions as transactions of interest

IR-2025-06, Jan. 10, 2025 — The Department of the Treasury and the IRS issued final regulations identifying certain partnership related-party “basis shifting” transactions as transactions of interest – TOIs – subject to the rules for reportable transactions.

IRS: For Carter remembrance, taxpayers have extra day to file, pay; returns, payments due Jan. 9 are now due Jan. 10

IR-2025-05, Jan. 8, 2025 — The IRS granted taxpayers an extra day, until Friday, Jan. 10, 2025, to file any return or pay any tax originally due on Thursday, Jan. 9.

National Taxpayer Advocate delivers Annual Report to Congress; flags Employee Retention Credit, Identity Theft Victim Assistance processing delays and calls for adequate funding to improve taxpayer services

IR-2025-04, Jan. 8, 2025 — National Taxpayer Advocate Erin M. Collins today released her 2024 Annual Report to Congress, finding overall improvement in IRS taxpayer service but also highlighting persistent challenges, particularly delays in processing Employee Retention Credit (ERC) claims and resolving Identity Theft Victim Assistance cases.

IRS Free File opens Friday: Free tax filing service available to millions on IRS.gov

IR-2025-03, Jan. 7, 2025 — The IRS announced that the IRS Free File Guided Tax Software will be available Friday for taxpayers ahead of the official start of tax season later this month.

IRS reminder: Final 2024 quarterly estimated tax payment due Jan. 15

IR-2025-02, Jan. 7, 2025 — The IRS encouraged taxpayers who paid too little tax in 2024 to make a fourth quarter estimated tax payment on or before Jan. 15, 2025.

IRS reminder to disaster area taxpayers with extensions: All or parts of 14 states, 2 territories need to file 2023 returns by Feb. 3; others have until May 1

IR-2025-01, Jan. 3, 2025 —The IRS reminded disaster-area taxpayers who received extensions to file their 2023 returns that, depending upon their location, their returns are due by Feb. 3 or May 1, 2025.

Ask the Advocate – Adapting in a Time of Need

As tax professionals, you are accustomed to deadlines, complex regulations, and the many emotions that come with tax season. However, when disasters strike, the landscape changes for both you and your clients. Disaster postponements, while offering temporary relief, often bring confusion, stress, and an overwhelming sense of uncertainty.

With severe storms and floods, wildfires, and other natural disasters, we’ve experienced postponements to file and pay that impact the typical April 15 tax deadline. And unfortunately, we are impacted by another devastating disaster which requires us to pivot.

In these moments, you may feel called to serve not just as tax advisors, but as empathetic guides to help your clients navigate an already stressful situation.

We are here to help and strive to provide our tax professional community with the latest information through Tax News, Tax News flashes and FTB’s public website. FTB provides alerts about disaster relief and other special circumstances with a banner at the top of the homepage to highlight critical, urgent information.

Disasters often disrupt routines and priorities. Your client, who is typically organized, may now have to recover lost or destroyed documents and may have been displaced. It is imperative that displaced taxpayers update their address through their MyFTB account. In addition, users can log into their MyFTB account to change their Contact Preferences from US Mail to email. From the Global Navigation, select Profile and Update Contact Information. Select the Contact Preferences box and edit the preferences link. Update the preferred delivery options. Users must view and agree to the terms and conditions and select save before exiting. If they don’t have a MYFTB account, now is a good time to register for one. Alternatively, your client may visit How do I change my address to update their address.

Disasters remind us of the strength of community. Here are helpful resources from other agency websites to provide further assistance:

• Governor’s Office: 2025 Los Angeles Fires
• Disaster Recovery Centers: Disaster Help
• Internal Revenue Service: Around the nation — California
• Employment Development Department: Emergency and Disaster Assistance for Employers
• California Department of Tax and Fee Administration: CDTFA - CA Department of Tax and Fee Administration

I am deeply saddened by the devasting Southern California wildfires. As tax professionals, you often go unrecognized for the vital role you play in times of crisis. Yet, it’s during these challenging moments that your work truly shines.

To every tax professional navigating the disaster postponements alongside your clients, I thank you. Your dedication, empathy, and expertise matter more than you may realize.

Finally, remember to take care of yourself. Serving clients during disasters can be emotionally and professionally demanding. It is important to prioritize your own well-being to avoid burnout. Please know my team is here to help where we can.