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LLC fee refunds based on Northwest Energetic Services, LLC protective claims

PURPOSE OF BULLETIN

To advise staff on procedures for those limited liability companies who filed or want to file protective claims due to a recent court decision on Northwest Energetic Services, LLC (NES).

BACKGROUND

NES was a foreign LLC that registered with the Secretary of State but did no business in California. The Court of Appeal held that assessing an LLC fee to an entity that had no income attributable to business conducted in California was unconstitutional as it applied to NES, and the fee should be refunded.

REFUNDS

We will start processing the claims when we receive the information requested in FTB Notice 2008-2.

Note: Refund claims are subject to review before the refunds are issued.

ADDITIONAL INFORMATION NEEDED TO PROCESS NES CLAIMS

Taxpayers who have already filed a protective claim need to provide the following information for us to process the refund claims:

  1. The LLC name and address.
  2. Name, phone and fax number of the managing member or designated contact person.
  3. The LLC name and Secretary of State (SOS) identification number. Unregistered LLCs use the identification number we issued.
  4. The tax years involved.
  5. A statement that the LLC did no business in California.

Fax to: 916.845.9796

Faxing the information will expedite the process.

Mail to:

ABS 389 MS:F340
Franchise Tax Board
PO Box 942867
Sacramento, CA 94267-8888

Courier service delivery or private courier mail:

ABS 389 MS: F340
Franchise Tax Board
C/O FTB Notice 2008-2
Sacramento, CA 95827

FILING NES PROTECTIVE CLAIMS

If an LLC wants to file a claim based on the NES court decision, the representative or LLC should fax a letter to the Franchise Tax Board stating, "This letter constitutes a protective claim for refund for (taxpayer's name). No Income Attributable to California" 

The letter must include the claim amount for each year and provide the information listed above in items 1-5. The letter should be Faxed or mailed using the fax number or addresses shown above. The letter must be signed by the LLC’s managing member or a representative with a POA.

OTHER PENDING COURT CASES

  • Ventas Finance I, LLC, a foreign LLC registered in California that earned income inside and outside California.
  • Bakersfield Mall, LLC, a foreign LLC registered with California and claims that it earned income only in California.

FILING PROTECTIVE CLAIMS BASED ON THE OTHER LLC FEE COURT CASES

If an LLC wants to file a protective claim based on the other LLC fee cases, the representative or LLC should fax a letter to Franchise Tax Board at 916.845.9796, stating

  1. The LLC name and Secretary of State (SOS) identification number. Unregistered LLCs use the identification number we issued.
  2. This is a protective claim.
  3. The tax years involved.
  4. A description of the issue (stating that the LLC fee is unconstitutional is enough).
  5. A statement of one of the following:
    • The LLC was doing business inside and outside California.
    • The LLC was doing business solely within California.
  6. The claim amount for each year.
  7. The name of the person to contact, phone number, and fax number.

The letter must be signed by the LLC’s managing member or a representative with a Power of Attorney

We request that LLC fee protective claims be filed by fax. FTB has set up a dedicated fax line for this purpose: 916.845.9796

An LLC may file an amended return or mail the letter to:

Amended returns:

Franchise Tax Board
PO Box 942857
Sacramento, CA 94257-0600

Mail to:

ABS 389 MS:F340
Franchise Tax Board
PO Box 942867
Sacramento, CA 94267-8888

Courier service delivery or private courier mail:

ABS 389 MS: F340
Franchise Tax Board
C/O FTB Notice 2008-2
Sacramento, CA 95827

 

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