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SMLLC 19254 Fees Misapplied

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October 17, 2014

We discovered that the Collection Cost Recovery Fee and Filing Enforcement Fee under Revenue and Taxation Code Section 19254 were misapplied to certain single member limited liability companies (SMLLCs). We determined that the Collection Fee and Filing Enforcement Fee should not be imposed on SMLLCs treated as disregarded entities for tax purposes.

The fee amounts of the Collection Fee and Filing Enforcement Fee vary by year. Multiple member LLCs or LLCs treated as corporations are not affected. SMLLCs will be identified based on information from their California Form 568, Limited Liability Company Return of Income. We will mail affected SMLLCs a letter indicating their eligibility for a refund, with a refund warrant to follow. We anticipate that refunds, repayments, or credits for affected SMLLCs will be completed over the next several months.

We are also abating any unpaid Collection and Filing Enforcement Fees applied to SMLLCs treated as disregarded entities. Those SMLLC taxpayers identified by us will receive a letter from us indicating the penalty was abated and their account adjusted.

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