Non payment of annual LLC fee for CA

[DTS]

Does anyone know if CA will waive this fee for past years the LLC was not doing business, but never closed out due to oversight? LLC opened in '07 (no business activity, no 568 filed and no $800 fee paid. 2008 is OK, but years 2009-2012 were the same as 2007, except the business was closed shortly after the end of 2008. Fellow is looking at $4,000, plus p/i and I'd like to get rid of most or all of it, if there is a possible way of doing so.

Any suggestions are appreciated.

Thank you.

D

[mactoolsix]

Calif is hungry!

There is no such waiver for the first year for any year thereafter. The LLC must pay the minimum franchise tax to the California Franchise Tax Board, even if it is non-operational. California has a minimum franchise tax of $800 on all LLCs that are taxed as partnerships (i.e. pass through taxation). This applies to foreign and domestic California LLCs.

First-year relief is available to Limited Liability Companies if they elect to be treated as either a C or S corporation.

Beginning January 1, 2013, a $2,000 penalty will apply to an LLC if the LLC fails to file a tax return within 60 days after receiving a formal written demand to file.

They will impose the penalty in addition to the demand and delinquent penalties and the filing enforcement fee.

However, you may try the FTB Filing Compliance Agreement

https://www.ftb.ca.gov/bills_and_notices/voluntary/agreement.shtml

Or call the State advocate

https://www.ftb.ca.gov/aboutFTB/Taxpayer_Advocate/index.shtml

Lots of luck on this one,
Mike

[DTS]

I feel "hungry" is an understatement

Thanks for your comments Mike. Just as I thought, but I was hoping against hope on this. I told him I did not have a good feeling about this and to get ready to pay up. I'll checkout your links.

D

[TaxGuyBill]

Just a side thought: how can CA or anybody else go after an entity that doesn't have any assets or do business?

Hypothetically, the members of an LLC are not responsible for the debts of the LLC.

[Y2KEA]

CA "Friendly" Tax Board

Here is my experience with the FTB:

C & S corps which have gone out of business & failed to dissolve continue to get love letters from FTB demanding ever increasing amounts of money. Since these corps are now insolvent entities, there is no way to collect. I have never heard of FTB moving against shareholders, officers or directors to collect. There are many inactive corps in CA no longer doing business & CA has no way to get money from them.

The same should be true of an LLC. Ignore the letters & move on.

[mactoolsix]

Food for thought:

If an LLC is single member, am I personally liable for minimum corporate tax fee?

http://www.avvo.com/legal-answers/if-an-llc-is-single-member--am-i-personally-liable-685592.html

Is it possible to walk away from a CA LLC?

http://www.taxalmanac.org/index.php/Discussion:Is_it_possible_to_walk_away_from_a_California_LLC_or_let_it_%22die_on_the_vine%22

How to cancel LLC in California without fee

https://legaladvice.rocketlawyer.com/questions/09d3be9e1c/how-to-cancel-llc-in-california-without-fee/

Seems most agree that if there was no distribution of assets, the FTB can not come after the member personally.

Mike

[S T]

We all know that a lot of Business Entities do not follow the procedures for dissolution either at the State or Federal Level ---Question though for Calif and LLC - S Corps are slghtly different, well maybe? Still an $ 800 fee, but maybe the "shareholder" will be not be faced with a "collection" --- Is this different on an LLC and "Members" that did not elect a S Corp Status

If the owner creating an LLC and it is a SMLLC, would that not be linked to an individual, and FTB might not allow and still assess the back taxes, to the individual

What if the individual decided to create and establish a "new" LLC in Calif??

We have to remember that Calif is "broke" and is becoming agrgressive in collecting any back taxes, fees and penalties.

Just asking the questions?

Sandy

[Wiles]

Distribution of assets

I have a client in this situation. She set up the LLC 6 years ago. Never filed nothing Never opened business. Now she is ready to open her business. I advised her that if she does not want to pay the $X,000's to get her LLC back in good standing with the FTB/SOS, then she needs to cancel it & walk away. She asked, "What about my business?" I told her that as long as she does not operate her business within the LLC, then she can avoid funding/distributing assets from the LLC. I told her to just open up a dba. Is this OK advice?

2nd question: She wants that dba to be the exact same name as the LLC minus the "LLC" at the end. Do you think the FTB will consider this as operating her LLC?