Contact us with your California corporate & securities law questions (949) 353-6347 or Contact us here

Legislature Imposes New Penalty On LLCs

As I discussed in this earlier post, “transacting intrastate business” is not the same as “doing business” in this state.  Foreign corporations and limited liability companies must register with the Secretary of State if they transact intrastate business.  Even though foreign corporations and LLCs are not transacting intrastate business in California, they may be considered to be doing business here.  The Corporations Code defines and uses the phrase ”transact intrastate business” (Sections 191 and 17001(a)) while the Revenue and Taxation Code defines and uses phrase “doing business” (Section 23101(a)).

Previously, California imposed a $2,000 per taxable year penalty for failure to file a return on a foreign corporation that failed to qualify to do business in California, or any corporation whose powers, rights or privileges have been forfeited or suspended, and that is doing business in California (unless the failure to file is due to reasonable cause).  Cal. Rev. & Tax Code § 19135.  Limited Liability Companies were not subject to this penalty.  Late in last year's session Assembly Member Skinner amended AB 318 to extend this penalty to both foreign and domestic LLCs.   The Franchise Tax Board estimates that this will add an additional $400,000 this fiscal year to the state's coffers.

Share on:

ANY QUESTIONS REGARDING CALIFORNIA CORPORATE AND SECURITIES LAW? CONTACT US DIRECTLY

We offer expert advice with the intricacies of California law.

Our years of experience and expertise allow us to help clients navigate the business laws in California.

CONTACT US

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

ABOUT OUR AUTHOR

30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
Partner at Allen Matkins
(949) 353-6328
 Contact me
Learn More About Keith

nominee-badge

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

CATEGORIES

see all

RECOGNITION

YOUTUBE

FACEBOOK