An LLC not classified as a corporation must pay the annual LLC fee if it is organized, doing business, or registered in California and has income of at least $250,000. The annual LLC fee is based on total income from all sources derived from or attributable to this state. For calendar year LLCs, June 15 is the date that their 2012 estimated LLC fee is due. For fiscal year LLCs, the estimated fee is due on the 15th day of the sixth month of the current taxable year.
The fees are as follows:
|If Total Income* Is:||
|$5,000,000 or more||
* Total income for LLC fee purposes is gross income plus the cost of goods sold, that are paid or incurred in connection with the trade or business of the taxpayer.
LLCs should use Form 3536, Estimated Fee for LLCs, to make their estimated fee payments. LLCs can also use our Web Pay feature to make their estimated fee payment, go to ftb.ca.gov, and search for Web Pay.
The LLC current estimated fee requirement is 100 percent of the previous taxable year estimated fee. If the r payment is late or less than the amount owed, we will assess a ten percent penalty on the underpaid fee. The underpaid fee is the difference between the current taxable year LLC fee, and the estimated fee paid on or before the estimated fee due date.
LLCs can avoid the penalty if their estimated fee payment is equal to or greater than their prior year’s LLC fee. For purposes of whether the LLC estimate fee penalty applies, there is no requirement that the prior tax year be a full 12 months. Also, there is no penalty for the LLCs first year filing in California.
Short Period LLC Returns
Sometimes an LLC is required to file a short period return, such as changing from a single member to a partnership. Each short period is considered a taxable year and subject to both the $800 annual tax and LLC estimated fee. In addition, if the LLC is going to owe an LLC fee in the current tax year, it is required to make an estimated LLC fee payment. Let’s take a look at an example:
Chocolate Chip LLC, a calendar year filer, reported a fee of $900 on its 2010 return. Chocolate Chip changed from a single member to a partnership on July 31, 2011. On June 15, 2011, Chocolate chip made a $900 timely estimated fee payment. Chocolate Chip filed its first short period return ending July 31, 2011, and reported a $2,500 LLC fee. Chocolate Chip does not have an estimated LLC fee underpayment penalty, because they meet the prior year exception.
On its second short period return for August 1, 2011, through December 31, 2011. Chocolate Chip reported a fee of $11,790. Chocolate Chip has no LLC fee estimated payment requirement for this short period, because the 15th day of the sixth month after the beginning of the tax year (January 15, 2012) is not included within its tax year (August 1, 2011, to December 31, 2011).