News & Insights

Destroying entire neighborhoods, taking lives and displacing over 100,000 people, the wildfires still raging in Los Angeles County are among the worst in California history.  Granting some relief to the disaster victims, both the Internal Revenue Service (IRS) and the California Franchise Tax Board have extended due dates for both tax returns as well as granted extensions for Section 1031 exchanges.

As a result, taxpayers who live in or have businesses in Federal Emergency Management Agency (FEMA) designated disaster areas – which currently include all of Los Angeles County – can file 2024 tax returns with a balance due, with a postponed due date of Oct. 15, 2025. The California Franchise Tax
Board (FTB) followed the IRS’ lead on Jan. 11, 2025. California disaster relief explained To help clarify the process and ongoing updates, the following is a recap of the IRS’s and FTB’s recent disaster relief for Californians, which applies to individuals, business entities, quarterly payroll, and excise
taxes as well as passthrough entity elective tax:

• Individual tax returns and payments are due on April 15, 2025.
• Estimated tax payments due Jan. 15, 2025; April 15, 2025, and Sept. 15, 2025.
• Tax returns are due on March 15, 2025, or April 15, 2025.
• California passthrough entity elective tax payments due March 15 and June 15, 2025.
• The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area so taxpayers do not need to contact the agency to get this relief.
• In addition, under Revenue Procedure 2018-58, the four-day and 180-day time periods under Section
  1031 have been extended if the relinquished property (or replacement property in a reverse exchange) is
  sold on or before Jan. 7, 2025. The 45-day identification period and 180-day exchange period will be
  extended up to 120 days or until Oct. 15, 2025 – whichever is later.
• Individuals and businesses in a federally declared disaster area who suffered uninsured or
  unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss
  occurred (in this instance, the 2025 return normally filed next year), or the return for the prior year (2024,
  normally filed this tax season).

Conclusion

It is not uncommon for the IRS – and/or local entities – to grant disaster relief to help communities recover in the aftermath of extreme weather or natural disasters. Many other situations have resulted in tax relief for victims, including the California wildfires, multiple hurricanes, Florida floods, and the Alaska storms. This latest disaster relief is very similar to what the IRS implemented last year as a result of damage from severe storms and flooding in San Diego County.

Our partner Phil Jelsma –chair of the firm’s tax practice team – recently discussed the details of tax relief provided to California wildfire victims in an article published in The Los Angeles Daily Journal and The Daily Transcript.