How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask R. Klein, EA Your Own Question
R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 3375
Experience:  Over 20 Years experience
63817126
Type Your Tax Question Here...
R. Klein, EA is online now
A new question is answered every 9 seconds

Hi 10 years ago me and my business partner form an LLC together,

Customer Question

Hi 10 years ago me and my business partner form an LLC together, which is 2002 and in 2003 we dissolve it and did not do any business using that LLC . suddenly we received a notice fro IRS Stating that the LLC is still active and we did not file tax return for the last 10 years, stating that we own them in over 15k of back taxes. How should we dispute this kind of case what forms? the LLC was form in California

thank you
David
Submitted: 3 years ago.
Category: Tax
Expert:  R. Klein, EA replied 3 years ago.

R. Klein, EA :

Thank you for contacting me about your Tax issue. I will work hard to help you understand the issue clearly.

R. Klein, EA :

Was the notice of back taxes from the IRS or from the California Franchise Tax Board? I'm thinking it's more likely the latter....

R. Klein, EA :

In any case, California considers any entity that is not formally dissolved to be open. You cannot close an LLC or corporation by simply ignoring it and hoping it goes away. California levies a minimum $800 per year tax on all entities until the entity dissolves.

R. Klein, EA :

Failure to file and pay the tax will not only result in the $800 being due for all those past taxes, but penalties and interest accrue as well. Complaining to the FTB "I forgot" won't do anything. California needs the cash and the officers of the LLC are legally bound under California law.

R. Klein, EA :

If the taxes are from the IRS, how to treat this situation is a little bit different.

Customer :

Yes the California franchise tax board mail us the letter. My Partner said he dissolve the by mail in the certificated of cancellation, but now they said it is still active. Is there any procedure to challenge this outcome.

R. Klein, EA :

You Said They Said.

R. Klein, EA :

Follow this link for instructions on how to terminate your entity: https://www.ftb.ca.gov/businesses/faq/Closing_a_Business_Entity.shtml

R. Klein, EA :

That's the first step you'll need to take. Whether you "did do it" before or not, it obviously was not completed, so it will need to be done to stop more penalties and taxes due.

Customer :

Ok once I resolve the business identity what other step I can reduce or appeal and settle this 10 years of files, which accumulate to roughly 15k today.

Customer :

It seems they should've contact us in 2 to 3 years rather then 10 years later state we never file tax or terminate this llc.

R. Klein, EA :

Once you have terminated your LLC, then you can set up a payment plan with California. You may wish to engage a CA CPA to see if they can negotiate some of the penalties, but other than that, you are likely stuck paying the taxes and interest.