Deadline extended to file LLC fee class action settlement claims

Eligible taxpayers who previously filed protective refund claims related to California’s imposition of the LLC gross receipts fee on the LLC’s worldwide income now have until August 19, 2022, to file their settlement claims with the Settlement Administrator. (FTB Tax News Flash, July 18, 2022)

In previous litigation, taxpayers successfully challenged the pre-2007 LLC fee calculation on behalf of:

  • LLCs located outside California with no income attributable to California, requiring a full refund of all LLC fees paid (Northwest Energetic Services, LLC v. FTB (2008) 159 Cal.App.4th 841); and
  • LLCs with income attributable to activities both within and without California, requiring a partial refund based on the portion of the fees paid attributable to activities outside California (Ventas Finance, I, LLC v. FTB (2008) 165 Cal.App.4th 1207).

After these cases were decided, the FTB solicited potentially impacted taxpayers to file protective refund claims and processed thousands of claims they determined were eligible for refunds under the Northwest and Ventas decisions. However, the FTB did not process claims for those LLCs it determined had income only from sources attributable to California.

The issue of whether the entire pre-2007 law was invalid is still being litigated. (FTB Limited Liability Corporation Tax Refund Cases, Cal. Ct. of App., 1st App. Dist., Case No. A140518) In discovery conducted in this ongoing LLC fee class action case, it was revealed that many of the taxpayers with unprocessed refund claims were entitled to refunds under the Northwest and Ventas decisions. The FTB has agreed to settle such claims. (FTB Notice 2022-02)

The Settlement Administrator previously sent notices and claim forms to all class members. Taxpayers who believe they are in the impacted class but did not receive a notice of settlement may contact the Settlement Administrator:

Phone: (888) 874-48874

Do not contact the FTB directly, as they have no role in processing of refund claims approved by the Settlement Administrator.