Alert - New California Law Regarding Voidability Penalties for Foreign or Out-of-State LLCs
The FTB requires that all LLCs classified as partnerships or disregarded entities that organize in California, register in California or do business in California, must file California Form 568 Limited Liability Company Return of Income. A LLC that files a form 568 must pay an annual tax, calculated on the total income from all sources derived from or attributable to the state of California. The minimum tax assessed is $800 per year. When a LLC fails to file a California tax return or pay its California taxes, the LLC may be suspended or forfeited. A contract entered into with that LLC may be voided by another party because of the status of the LLC. However, there was a loophole in that a foreign or out-of-state, nonqualified LLC who did business in California was exempted from such...