Late Filing Penalty Refunds for Certain Single Member Limited Liability Companies (SMLLCs)
We are processing refunds of a penalty applied to certain SMLLCs. We discovered that the Late Filing Penalty under Revenue and Taxation Code Section 19172 ("Late Filing Penalty") was misapplied to certain SMLLCs. We determined that the Late Filing Penalty should not be imposed on SMLLCs treated as disregarded entities for tax purposes.
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. Multiple member LLCs are not affected. SMLLCs will be identified by us based on information on 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. The refund or credit of the penalty will include applicable interest and is restricted to those tax years and/or payments made within the statute of limitations (SOL) for refunds as of June 26, 2013. We anticipate that refunds/credits for affected SMLLCs will be completed over the next several months.
We are also abating any unpaid Late Filing Penalties 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. SMLLCs that elected to be treated as corporations and file a California Form 100 tax return were not affected by the Late Filing Penalty.