LLCs that paid the California LLC fee, but did no business in California, may request a refund based on the recent Northwest decision.¹ However, even for LLCs that filed protective claims, their 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.

You may fax this information to the FTB at:

(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.

An LLC that did not file a protective claim should file a claim for refund for all years open under the statute of limitations. The claim should include the information listed above. Complete information is available in the May 2008 issue of Spidell's California Taxletter®. 

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