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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 113485
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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I filed the annual report online for my LLC in North

Customer Question

I filed the annual report online for my LLC in North Carolina in April, 2016. In August 2016, I received a notice from the District Attorney Worthless Checks division about a payment owing to the Secretary of State's office.Upon researching the matter, I learned that the annual report filing had been canceled due to non-payment. Apparently the payment did not go through, and I did not receive the notices (they were likely sent to an old address.)Because the filing had been canceled, I filed the report again and paid the $200 filing fee. I sent a letter to the District Attorney's office and thought the matter closed.The DA called and advised me that the Secretary of State still showed the filing fee owing from the original filing. I contacted the Secretary of State, and they insist that I still owe for the original filing, even though it was canceled.I advised the Secretary of State's office that I am willing to pay $25 for the cost of filing the original document. However; I am not willing to pay the entire $200 fee.My reason for this is that the filing fee for a normal corporation annual report is only $25. An LLC annual report filing fee is $200, because a large portion of this fee is meant to make up for the general business franchise tax that LLC's are not subject to in North Carolina. In fact, according to NC statute, if an LLC chooses to be taxed as a corporation, they can take a tax credit of the difference between the LLC filing fee and the normal business filing fee (resulting in a credit of $175.) This provides evidence that only $25 of the $200 filing fee is in fact related to the cost of filing the report, and the other $175 is a replacement for the business franchise tax.For these reasons, I believe that at most, I should only be asked to pay $25 toward the costs of filing the original report. I paid the entire $200 with the new filing, and it would be grossly unjust to require me to pay this twice. The Secretary of State's office will not budge.I would greatly appreciate your legal opinion about whether they have any legal justification for charging this fee (the entire amount) on a canceled filing.
Submitted: 3 months ago.
Category: Business Law
Expert:  TJ, Esq. replied 3 months ago.

Hello and thank you for the opportunity to assist you. My name is ***** ***** I will do my very best to help if I can. Please bear with me a few moments while I review your question, conduct any necessary research, and type a response. Thank you.

Expert:  TJ, Esq. replied 3 months ago.

Hi again.

After contemplating what you wrote, I'm really sorry to say that I don't think that I'll be able to provide you with a useful answer. However, it's quite likely that another attorney at this website will be able to do so. Accordingly, I will open your question for other attorneys to review. Thank you for using this service.

Customer: replied 2 months ago.
Relist: Incomplete answer.
The original expert was unable to answer my question.
Expert:  Law Educator, Esq. replied 2 months ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.


Unfortunately, there is some not so good news for you about this. You actually handled this matter incorrectly when you received notice that the annual report was cancelled because your check bounced or was not honored. The way this had to be handled was you needed to send a new check to the Secretary of State to make good on the check that did not clear and your annual report would have been reinstated. When someone files with the secretary of state and their filing is cancelled that fee is non-refundable and the state does not return money. So while you feel like you should not owe the money, had you properly handled this matter and sent them the payment under the old application you would be not facing the additional $200 charge.

What your sole recourse is now is contacting the secretary of state's office and trying to negotiate with them, because if they are not willing to waive the payment (they rarely do waive these payments in these situations) you have to pay them or the DA will file charges and your claims as to how this happened would not be a defense to owing them the money I am afraid. It is not grossly unjust since this is the secretary of state's policy and you did this the wrong way when you handled it I am afraid. Had you called them from the beginning when you received the notice, they would have told you to send them a new check in.

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Customer: replied 2 months ago.
Actually they would not have reinstated the old filing because of the time that had passed (I did not receive any notices from them so I did not find out until 4 months after the filing when I was contacted by the DA.) No matter what, they say I would have had to file again and pay the fee again. I don't understand their legal basis for charging me this amount particularly because it is so much more than a regular corporation filing. I should not have to pay $200 for a filing that was canceled when a normal corporation would only have to pay $25. The other $175 is basically a substitute for the business franchise tax and I shouldn't have to pay that twice.
Expert:  Law Educator, Esq. replied 2 months ago.
Thank you for your reply.

Sorry, I did not realize it was that long since the filing. Unfortunately, it was your fault for the check not clearing though, the legal basis is the Secretary of State's rules and policies, since they set these rules and policies for filings in their office. If the Secretary of State will not waive it, there is no other legal remedy, that is the problem you are running into.
Customer: replied 2 months ago.
I understand that the basis are the rules they set, but who determines if these rules are legally justifiable? Like I said, I would pay the fee if it were just for the cost of the filing, but the amount is unreasonable considering the majority of the fee is meant to collect revenue in lieu of a tax. Who can I go to for a legal opinion on that?
Expert:  Law Educator, Esq. replied 2 months ago.
Thank you for your reply.

The Secretary of State himself determines if the rules are legally justified under the constitutional separation of powers. Thus, the judiciary cannot tell the legislative branch or executive branch how to run their specific branches, so if the Secretary of State has set this rule, you can complain to the State Attorney General about the rule being overreaching, but legally that would be the only option.