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Single Member LLC (SMLLC) Penalty FAQs

Background

We discovered a partnership late filing penalty (under Revenue and Taxation Code Section 19172) was misapplied to certain Single Member Limited Liability Companies (SMLLCs) treated as disregarded entities for tax purposes.

  1. Why did I receive a letter from the Franchise Tax Board?

    Our records indicate we imposed a partnership late filing penalty against you for one or more tax years. We are in the process of correcting your account. Depending on your situation, we will either issue a refund or repayment to you of the penalty, credit your account, or cancel the unpaid penalty.

  2. How long will it take to receive my check?

    You will receive a check  in approximately 2 weeks from the date we notify you by mail.

  3. For what tax years will refunds/repayments be issued?

    We are providing refunds, credits or repayments to ALL eligible taxpayers who paid the partnership late filing penalty. Eligible taxpayers are SMLLCs in good standing, treated as disregarded entities for tax purposes.

  4. Will my refund include interest?

    We will include interest on refund/credit payments that were within the statute of limitations as of June 26, 2013, the date we discovered the misapplication of the partnership late filing penalty for the affected taxpayers.

    Generally, we authorize a refund/credit of the penalty paid during the later of:
    • Four years from the date the return was filed, if filed within the extended due date;
    • Four years from the due date of the return, without regard to extensions; or
    • One year from the date of the overpayment.
  5. Will FTB pay interest on all refunds?

    No. The statute of limitations limits the payment of interest to only refunds/credits within the statute of limitations as described above. If you paid the late filing penalty and it is outside the statute of limitations, you will be repaid the amount that you paid for the penalty but you will not receive interest. The law does not authorize interest for such repayments.   

  6. I received a letter indicating my SMLLC would get a refund/repayment, but I have not received it yet. Where is it?

    We may have applied your refund to an outstanding liability on another tax year or to another state department. Please call us at 800.852.5711 for additional information.

  7. Will I receive notification if my refund/repayment is applied to my balance due?

    Yes. We will send you a letter notifying you we abated the penalty. If you owe other balances, call us at 888.635.0494 for your current balance.

  8. Why is my SMLLC receiving multiple refund/repayment checks?

    Our goal is to process the refunds and repayments for each SMLLC on the same day. However, you will receive a separate check for each tax year.

  9. What can I do if I paid a penalty and I don't receive a refund? Can I file a claim or appeal?

    You can file a claim for refund, stating the basis of your claim, and mail it 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

    If we deny your claim for refund you have the right to file an appeal with the State Board of Equalization.

  10. Will FTB reinstate my entity status if it was suspended due to this incorrectly applied penalty?

    Yes. Please call us at 888.635.0494 for additional information.