California OK’s
7-month extension for
C corps


Dana Lance
San Jose
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Josh Grossman
San Francisco
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Michael Maggipinto
San Jose
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Jamie C. Yesnowitz
Washington, D.C.
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Chuck Jones
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Lori Stolly
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On Dec. 2, 2019, the California Franchise Tax Board (FTB) issued FTB Notice 2019-07 allowing an automatic seven-month extension to C corporation taxpayers in good standing filing Forms 100 (including REITs, REMICs, and RICs) or 100W for taxable years beginning on or after Jan. 1, 2019.1 Under this notice, the new California extended due date for calendar-year corporations will be Nov. 15, instead of Oct. 15, with similar relief for fiscal year taxpayers.

FTB notice changes prior policy on extended due dates Pursuant to statute, the FTB is allowed to provide up to a seven-month extension for filing a C corporation tax return.2 When original federal and California income tax returns for calendar-year C corporations were both historically due on March 15, the FTB provided a full seven-month extension for the California return to Oct. 15.3 When the federal government changed the original C corporation due date for calendar-year taxpayers from March 15 to April 15, the FTB did not extend the due date for the California return past Oct. 15.4

The FTB’s most recent notice allows for the seven-month extension to fully operate and extend the extended California corporation income tax due date to Nov. 15. The notice does not apply to S corporations, so the extended due date for calendar year S corporations will remain September 15. Likewise, the FTB’s change in policy does not apply to individuals and pass-through entities. The seven-month extension of time to file the California return does not serve as an extension to pay tax liability that is due on the original due date.

Commentary In slightly more than a page, the FTB accomplished dramatic change that many California corporate taxpayers should welcome next fall. Logistical problems often ensue when the federal and state tax filing due dates are the same. The federal change in due dates in 2016, followed by the enactment of the Tax Cuts and Jobs Act (TCJA) at the end of 2017, exacerbated this problem in a substantial number of states that did not extend their due dates in response. As California has not substantially conformed to the TCJA to date, corporate taxpayers essentially are required to calculate federal taxable income twice: once for the federal income tax return under TCJA rules; and a second time for California generally using pre-TCJA rules. As a result, filing a timely California C corporation return in an environment where a paucity of federal guidance made it difficult to timely complete extended federal returns by Oct. 15 resulted in a very challenging compliance season.

Given California’s size and sway, it will be interesting to see whether other states with extended due dates concurrent with the federal extended due date act in a similar manner in the coming year. One would think that the relative lack of a fiscal impact from a one-month extension, as well as the desire for state tax authorities to receive and process more accurate tax returns, would encourage change nationwide. California’s ability to act in this area undoubtedly was made easier by the fact that the change was effected through FTB action. In contrast, in many states, legislation may need to be adopted to address this issue.

1 FTB Notice 2019-07 (Dec. 2, 2019). The Notice can be found here:
2 CAL. REV. & TAX. CODE § 18604.
3 FTB Notice 92-11 (Oct. 23, 1992).
4 FTB Notice 2016-04 (Nov. 4, 2016).

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