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LLC Estimated Fee Due June 15th

For most calendar year LLCs, June 15 is the date that their 2011 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. 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 your estimate fee payment, go to ftb.ca.gov, and click on Payment Options.

The estimated fee requirement is 100 percent of the current taxable year fee. If your payment is late or less than the amount owed, we will assess a ten percent of the underpaid fee penalty. 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. Unlike the corporation’s estimated-tax prior tax-year exception, there is no requirement that the prior tax year be a full 12 months. Also, there is no penalty for the LLC’s first year filing in California. We cannot waive the penalty for reasonable cause.

Short Period LLC Returns

Sometimes, when a LLC is required to file short period returns such as a technical termination. Each short period is considered a taxable year (R&TC 17010) and subject to both the $800 annual tax and LLC fee. In addition, if the LLC is going to owe a LLC fee in the current tax year, it is required to make an estimated LLC fee payment. Let us look at an example:

Lemon Pie LLC, a calendar year filer, reported a fee of $900 on its 2009 return. Lemon Pie had a technical termination on July 31, 2010. On June 15, 2010, Lemon Pie made a $900 timely estimated fee payment. Lemon Pie filed its first short period return ending July 31, 2010 and reported a $2,500 LLC fee. Lemon Pie does not have an estimated LLC fee underpayment penalty. The LLC meets the prior year exception.

On its second short period return for August 1, 2010 through December 31, 2010, Lemon Pie reported a fee of $11,790. Lemon Pie has no estimate payment requirement for this short period, because the 15th day of the sixth month after the beginning of the tax year (January 15, 2011) is not included within its tax year (August 1, 2009 to December 31, 2010).

Back to May 2011 Tax News