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California LLC Tax Litigation Update


By: Amber Stevenson

A California superior court has certified a class action suit that will stop the FTB from erroneously imposing the $800 annual/minimum tax on many out-of-state entities. The affected entities are LLCs, LP’s and corporations that were passive investors in LLCs doing business in California but were not actually doing business in California themselves.

Only those taxpayers who paid the tax and timely filed claims for refund are included in the certified class. Those taxpayers should be receiving notices from the FTB in the near future, alerting them that they will be part of the class unless they opt out by August 20, 2024. A copy of the notice can be found on the FTB’s website:

Taxpayers who were negatively affected by the FTB’s treatment of passive activities, but who did not file a claim for refund are still potentially eligible for relief. This includes taxpayers who paid the tax but did not file a claim for refund and those who did not pay the tax but have received notices from the FTB indicating that tax is owed. Such taxpayers have the option to contact the attorneys representing the taxpayers in the class action suit directly ( and Alternatively, if you believe you may be eligible for relief, please feel free to contact us to discuss your situation further.

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