Taxes and Fees for LLCs

Division 2, Part 10, Chapter 10.6 of the Revenue and Taxation Code deals with taxes and fees on limited liability companies under the California Personal Income Tax Law.

Section 17941 provides that a limited liability company doing business in this state is required to pay annually to this state a tax for the privilege of doing business in this state in an amount equal to the applicable amount specified for the taxable year.

In addition, an LLC must pay annually the tax prescribed if articles of organization have been accepted, or a certificate of registration has been issued, by the office of the Secretary of State. The tax is to be paid for each taxable year, or part thereof, until a certificate of cancellation of registration or of articles of organization is filed on behalf of the limited liability company with the office of the Secretary of State.

If a taxpayer files a return with the FTB that is designated as its final return, the FTB is required to notify the taxpayer that the annual tax continues to be due annually until a certificate of dissolution is filed with the Secretary of State or a certificate of cancellation is filed with the Secretary of State. The tax assessed under this section is due and payable on or before the 15th day of the fourth month of the taxable year. The terms “deployed,” “operates at a loss,” and “small business” are defined.

Section 17942 provides that, in addition to the tax imposed under Section 17941, every limited liability company subject to tax is required to pay annually to this state a fee equal to specified amounts in this section.

Section 17943 contains a statement of legislative intent.

Section 17944 provides that the effective date of dissolution, withdrawal, or cancellation of a limited liability company is the date on which the certified copy of the court decree, judgment, or order declaring the limited liability company duly wound up and dissolved is filed in the office of the Secretary of State or the date on which the certificate of winding up and dissolution is filed in the office of the Secretary of State.

The effective date of cancellation of registration of a foreign limited liability company is the date on which the certificate of cancellation of registration is filed in the office of the Secretary of State. The Secretary of State must recommend that all required documents filed with the Secretary of State be sent, if mailed, by certified mail with return receipt requested. The Secretary of State also must notify persons that receipt of documents by the Secretary of State will be acknowledged within 21 days of receipt.

Section 17946 prohibits an LLC from being subject to the taxes and fees imposed by this chapter if the limited liability company did no business in this state during the taxable year and the taxable year was 15 days or less.

Section 17947 prohibits an LLC from being subject to the taxes imposed by this chapter for a taxable year if the limited liability company does all three specified actions. It also defines the term “final annual tax return.”