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LLC FEE CLAIMS FOR REFUNDS CITING VENTAS FINANCE I, LLC

PURPOSE OF BULLETIN

To advise staff on procedures for those limited liability companies who filed or want to file claims for refund due to the California Court of Appeal decision of Ventas Finance I, LLC (Ventas).

BACKGROUND

Ventas was a foreign LLC that registered with the Secretary of State that earned income inside and outside California. The Court of Appeal held that former CR&TC §17942 was unconstitutional as it applied to Ventas because the LLC fee was based on total income of an entity that earned income inside and outside California, without apportionment to income attributable to, or derived from, California sources.

THE DEFAULT AND ALTERNATIVE METHODS FOR COMPUTING THE REFUND AMOUNT

In Ventas, the LLC fee refund is limited to the amount of the LLC fee paid in excess of the LLC fee that would have been assessed using a method of fair apportionment.

The taxpayer can choose between the Default and the Alternative Method to compute the amount of the refund. Additional information may be required depending on which method the LLC chooses to calculate its refund.

Default Method – Schedule R: We will use the information from Schedule R, Schedule R1, Total Sales, column (b) (Total Sales amount within California only) to compute the refund:

  • Schedule R was included with the Form 568

No additional information is needed. The LLC does not need to resubmit a Schedule R.

  • Schedule R was not included with Form 568

The LLC must provide the following information for each year it files a claim for refund:

    • Schedule R for each year its claiming a refund
    • Additional information needed for the claims like Ventas (See below)

Alternative Method – LLC Worksheet

The LLC must provide the following information for each year it files a claim for refund:

  • A 2008 Limited Liability Company Income Worksheet completed with respective information for each tax year.
  • Computation of the revised LLC fee.
  • Additional information needed for the claims like Ventas (see below).

Important: The LLC must provide us with the revised LLC worksheet no later than August 20, 2009. If the LLC does not provide us with the revised LLC Worksheet by that date, the Default Method will be used to calculate the refund.

Note: Refund claims are subject to review before the refunds are issued.

NEW VENTAS LIKE CLAIMS

Taxpayers who are filing new claims for refund based on the Ventas decision must provide us the information listed in both:

  • The Default and Alternative Methods for computing the refund amount.

Additional information needed for the claims like Ventas.

FAX NUMBER AND MAILING ADDRESS

Fax Number:

916.845.9796

Faxing the information will expedite the receipt of your information.

Mail:

ABS 389 MS: F340
C/O FTB Notice 2009-04
Franchise Tax Board
PO Box 942867
Sacramento CA 94267-8888

Courier Service Delivery or Private Courier Mail:

ABS 389 MS: F340
Franchise Tax Board
C/O FTB Notice 2009-04
Sacramento CA 95827

FILING CLAIMS FOR REFUND BASED ON OTHER LLC FEE COURT CASES

For information on how to file claims for refunds based on other LLC Fee court cases, see FTB Notice 2009-04.

 

Back to Public Service Bulletins - 2009