Found an issue on this page? Let us know and we will look into it as soon as possible.
Can a person be held personally liable for a California LLC's tax penalties?
Anonymous8 views3 answers
I formed California LLC in 2006 with one other partner. We never had ANY income. The company never had ANY assets or a corporate bank account. Our only expenses were paid via our personal checking accounts. We never did any business other than in 2006. The LLC was never formally dissolved.
At my address (the company's biz address), I have received notices requesting that the LLC file back tax returns. I called the CA FTB, they say that company owes thousands in penalties.
My questions:
Can I personally be held liable for penalties owed by the LLC? If I cannot be made to pay the penalties, is there any other way that this can negatively impact me?
Should I now formally file paperwork to dissolve the company or file returns for any year?
Thanks in advance for your advice.
The penalties are due by the entity, not you.
Do not attempt to dissolve since that will require a tax clearance certificate.
Any other way this could negatively impact you. Not that I can tell without an interview or other facts.
gives analysis, not legal advice that you can rely on.
You could be personally liable if there are "alter ego" issues regarding your LLC. However, as a practical matter, it's unlikely the FTB would go after you. The LLC will eventually be suspended for nonpayment of taxes, which will have the same effect as a dissolution.
. The owners of a "Limited Liability Company" have no liability to anyone as owners. That includes the FTB. The exception under the Ralite case is if you withdrew assets at a time whena corp owed taxes, you can be personally liable to the FTB. I would think the same rule applies to LLC's. I am not aware of a case to the contrary. Another exception that many LLC owners are not aware of is that the owner remains liable for his own actions, e.g. for an auto accident when the owner was driviing or a surgeon for his own malpractice.
Do not dissolve the LLC. Just ignore the notices.
