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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....
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.
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.
If the taxes are from the IRS, how to treat this situation is a little bit different.
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.
You Said They Said.
Follow this link for instructions on how to terminate your entity: https://www.ftb.ca.gov/businesses/faq/Closing_a_Business_Entity.shtml
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.
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.
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.
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.