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CA LLC sold 2004. Forms not filed with state. FTB states franchise tax fees owed for all those years. What are our options?

Oxnard, CA |

Broker and/or title company did not file the closing forms with state and we no longer have the records of sale as so much time has passed. FTB is looking to collect $800 + penalties and late fees for the past 8 years. This is the first time that we received letters from them... Why did FTB not approach us in 2005 or 2006? Can they wait that long???? What can we do? We filed the required "zero" returns as requested but they still want payment. Do we have options?

Attorney Answers 4

Posted

As Mr. Doland has pointed out, the minimum franchise taxes are owed by the LLC, not by you personally. So if the fees are not paid, the entity is supended. You do not have a personal liability. So your option is to not use the entity and let it "die."

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Posted

The 1st place to look is your sale documents. and if you didn't save copies,see if you can get them from the broker or title company. It sounds like this was a real estate deal if there was a "broker and/or title company" involved, and your RE agents would have owed you "fiduciary duties in this transaction, so you may have a cause of action for indemnity against them if they performed negligently.

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Posted

The sale was too long ago and both broker and title company say they no longer have the records either. The only thing we might still be able to get is something from the lender showing that the bank was paid during the transaction.

Posted

If you sold the LLC in 2004, you can pass the FTB letters on to the new owners.
If you bought the LLC in 2004 and are the owner(s), then you can either pay the minimum annual FTB fee or if the company has no assets or activity, you can allow it to become suspended. The tax is owed by the entity, not the owners.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.

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Posted

Even if the letters are in the name of the old business? They have changed the name and I believe that the business might have been resold sometime after we sold it.

Posted

Let's be clear here -- did you sell the LLC or did the LLC sell it's business assets? The answer to this question makes a big difference.....so please put forward additional facts.

My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained. Please click "helpful" or "best answer" if my answer added any value or add a "comment" if you have more info for me to help you get a better answer.

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Posted

Good point... it turns out the LLC sold its assets. Apparently, the LLC has existed all these years while we thought "it" had been sold.

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