California’s Program To Suspend LLCs For Noncompliance

Beginning now, California’s Franchise Tax Board (FTB) will take action which helps the FTB bring Limited Liability Companies (LLCs) into tax compliance and reduce the State’s budget deficit.

Read more about this in the Los Angeles Times article from January 12, 2009.

California’s FTB and California’s Secretary of State (SOS) are working together to implement a suspension/forfeiture process for Limited Liability Companies (LLCs).

The FTB will suspend/forfeit the rights, powers and privileges of LLCs for non-payment of taxes, penalties, or interest, and/or failure to file a return (California’s Revenue and Taxation Code Sections 23301, 23301.5 and 23304.1(d)). The LLC suspension/forfeiture process will be very similar to the one for corporations.

Implementing the suspension/forfeiture process will have a dramatic effect on LLCs that have failed to meet their filing and payment obligations. We will send notification to all entities at their last known addresses, 60 days before imposing suspension/forfeiture.

Non-registered LLCs acting and filing in California will be subject to contract voidability. The reasons for contract voidability are the same as for suspension/forfeiture: failure to file a return, and/or failure to pay taxes, penalties, or interest.

Get help with compliance. Call a tax attorney licensed in California. Call Mitchell A. Port at (310) 559-5259.