Revenue and Taxation Code (R&TC) 19172 per Member Penalty for Certain SMLLCs Campaign

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February 4, 2014

Purpose of Bulletin

To inform staff of our refunds and/or abatements issued for a misapplied Late Filing Penalty (R&TC Section 19172) for disregarded Single Member Limited Liability Companies (SMLLCs).

Background

We discovered that the Late Filing Penalty under R&TC Section 19172 was misapplied to certain SMLLCs. The Late Filing Penalty is a maximum of $50 ($10 per member x 5 months) for years 2010 and prior, and $216 ($18 per member x 12 months) for 2011 and later.

We will abate any misapplied late filing penalties applied to SMLLCs treated as disregarded entities.

We anticipate that refunds or credits for affected SMLLCs will be completed over a period of several months.

Refunds Within SOL

We will send affected SMLLC taxpayers a letter indicating their eligibility for a refund, with a refund warrant to follow.  Only active, restored, or revived SMLLCs are eligible for a refund or offset.

Payments within the statute of limitations (SOL) as of June 26, 2013, can be refunded or offset. Refund or credit of the penalty will include applicable interest and is restricted to those tax years and/or payments made within the SOL for refunds as of June 26, 2013. See R&TC 19306, for information regarding SOL.

Claims for Refund

We are identifying and processing refunds for affected SMLLCs without further action by the SMLLCs, however, a SMLLC may also file a claim for refund, to one of the addresses below:

For regular mail, send to:

BUSINESS ENTITY NON-REMIT RETURN MS A311
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA 94257-0500

For private carrier or overnight delivery service, send to:

BUSINESS ENTITY NON-REMIT RETURN MS A311
FRANCHISE TAX BOARD
SACRAMENTO CA 95827-1500

Taxpayer Inquiries

Follow your established unit procedures.

Taxpayers can call us at 800.852.5711, weekdays, 7 a.m. to 5 p.m., except state holidays.

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