$2,000 Penalty for LLCs
In our July 2012 Ask the Advocate article, we addressed the penalty ($2,000 per tax year) that we can assess suspended or forfeited corporations doing business in California. On September 14, 2012, the law (R&TC Section 19135) that imposes this penalty was amended by Assembly Bill (AB) 318 (Skinner, Stats. 2012, Ch 313).
Beginning January 1, 2013, the $2,000 penalty will also apply to an LLC if the LLC fails to file a tax return within 60 days after receiving a formal written demand to file.
We will impose the penalty in addition to the demand and delinquent penalties and the filing enforcement fee.
The penalty already applies to corporations and will now include the following:
- Nonqualified foreign LLCs that are doing business in California.
- LLCs that continue to do business while they are suspended (domestic LLCs) or forfeited (foreign LLCs).
The penalty may be waived if there is reasonable cause.
For more information on penalties we may assess businesses and individuals, see our recently updated FTB 1024, Penalty Reference Chart.