FTB issuing LLC fee refunds 

The FTB will begin issuing LLC fee refunds to LLCs that paid the California LLC fee, but did no business in California based on the recent Northwest decision.¹ However, even for LLCs that filed protective claims, these LLC fee refunds will not be automatic.

Three separate lawsuits have been filed against the FTB challenging the constitutionality of the LLC fee:

·        Northwest — An LLC that registered with the California Secretary of State, but did no business in California;

·        Ventas — an LLC with income from both California and non-California sources;² and

·        Bakersfield Mall — an LLC operating wholly within California.³

The litigation in Ventas and Bakersfield Mall is still pending; only Northwest is final. So, in order for LLCs that did no business in California to receive LLC fee refunds, they must file additional information with the FTB.

What to do

LLCs that did no business in California, but paid the fee, must provide this information to the FTB:

1. The LLC’s name and address, including the name and phone number of the managing member or designated contact person.
2. The LLC’s Secretary of State file number or FTB temporary LLC number (for unregistered entities) and Federal Employer Identification Number.
3. Taxable year(s) involved.
4. A statement that the LLC did no business in California for each of the taxable years for which the claim is being filed.

(916) 845-9796

 Or mail it to:

ABS 389 MS: F340
Franchise Tax Board
P.O. Box 942867
Sacramento, CA 94267-8888

For Courier Service Delivery or Private Courier Mail:

ABS 389 MS: F340
Franchise Tax Board
C/O FTB Notice 2008-2
Sacramento, CA 95827

The FTB recommends faxing the information, as it will expedite the processing of your clients’ LLC fee refunds.

For more information on this topic, be sure to attend Spidell's 2008 Summer Seminar, and Spidell's 2008-2009 Fall Federal and California Tax Update.

¹ FTB Notice 2008-2; Northwest Energetic Services, LLC v. FTB (January 31, 2008) 159 Cal.App. 4th 841, mod. (Mar. 3, 2008), petn. for review pending with respect to attorney fees
² Ventas Finance I, LLC v. FTB (November 7, 2006) Super. Ct. S.F. City and County No. CGC-05-440001
³ Bakersfield Mall, LLC v. FTB (April 25, 2007) Super. Ct. S.F. City and County No. CGC-07-462728