Some of the largest and most profitable U.S. companies are postponing billions of dollars in tax payments—interest-free, at a time when borrowing costs are rising—because of disaster-related deferrals. The relief is boosting profits and cash flows.
The Internal Revenue Service offers tax relief in the wake of disasters to help individuals and companies recover and to give them more time to gather records that may have been damaged. Hurricane Idalia in Florida and the wildfires in Hawaii, for instance, activated tax deferrals in those areas. For nearly all residents and businesses in California, the IRS delayed the tax deadline for victims of last winter’s severe storms, flooding, landslides and mudslides that have caused fatalities, disrupted thousands of lives and led to billions of dollars in damages. This is pushing quarterly income-tax payments throughout 2023 to mid-October.
In California, that means billions in taxes that companies have been able to put on the back burner, according to corporate disclosures. The relief applies to nearly all the state’s counties for around nine months, an unusually long period, tax experts say. With the concentration of corporate headquarters in the state—67 S&P 500 companies, according to data provider S&P Global Market Intelligence, making it the most popular domicile for the largest U.S. companies—significant benefits are going to some of the most profitable American companies.
Read the full story on The Wall Street Journal here.