LATE PENALTIES - PA Annual Registration

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#1
stockma  
Posts:
10
Joined:
26-Feb-2015 11:56am
Location:
PA, USA
Asking for a friend...

She is a real dummy. She is a CPA who struck out on her own preparing 1040s in mid 2015 with a Pennsylvania LLC. However, her little business never really took off and soon it cost as much to buy the software than she was making preparing returns, and to pay the bills, she got a job signing returns for a big firm, paid by W2.

***LESSON LEARNED, NOT EVERYONE IS AN ENTREPRENEUR***

She kept her little LLC and prepared fewer than 10 returns a year. Fees, less than $3000 - $6000 a year, were deposited in a bank account in the name of her little LLC. She has a Fed EIN and used it for the return filings along with her ptin.

Now she learns that her state, PA, requires tax prep firms to file annual registrations with a filing fee of $560. Not only that, but the late fee is $500.

2015 - 2020: 6 x $560 = $3360 registration fees
6 x $500 = $3000 late filing fees
Total: $6360 in potential outlay to get caught up.

She is considering
1) filing the registration fees and writing a sad letter to see if the Secty of State will let her off the hook for the penalties.
2) retroactively terminating the little firm
3) getting busy reorganizing the garage and put this off again

Advice? Sarcasm is expected, but I'm hoping for sage words from the wise folks here.

THANK YOU
 

#2
sjrcpa  
Posts:
6475
Joined:
23-Apr-2014 5:27pm
Location:
Maryland
I doubt that 2) is feasible.
1) sounds worth a try but I wouldn't hold out much hope of PA leniency.
 

#3
AlexCPA  
Posts:
488
Joined:
11-Apr-2018 9:40pm
Location:
A Shark On A Cash Reef
In the state of CA, we had the Ralite case (Appeal of Howard Zubkoff and Michael Potash, Assumers and/or Transferees of Ralite Lamp Corporation -- https://www.caltax.com/store/image/file ... be_004.pdf). This case is often mentioned when trying to ascertain whether an LLC member may or may not be personally liable for the $800.00 minimum annual tax assessed by the state of CA on LLCs.

It may be possible to find a similar case applicable to the state of PA which may be helpful for "your friend." ;) ;)
Even more of my antics may be found on YouTube:
https://www.youtube.com/channel/UCXDitB ... sMwfO19h7A
 

#4
Posts:
2611
Joined:
24-Jan-2019 2:16pm
Location:
North Shore, Oahu
Do they possibly automatically dissolve your LLC when you don't renew for a few years? I think many states do this. Are you sure that you still have the LLC?
 

#5
Posts:
835
Joined:
1-Sep-2020 2:47pm
Location:
845-NY
Interesting bit to share.
A number of years back NY instituted an LLC filing fee, as an additional money grab.
The LLC filing fee is $25 for a disregard entity (Sch C), exempt for S corps who pay the franchise filing fee when filing a NY S corp return, and the LLC fee on a partnership is based on gross income. 0-100k = $25 100-250=$50, etc.

The interesting part, is that to date NY has never come to collect the $25 from LLCs filing as a Sch C.
I have new clients come to me who were never aware of it, we get them on the right path moving forward, but never revisit prior years, and not a single client has ever received a letter for the LLC filing fee from a prior year.

If you have not received a letter from PA so far, I would probably try to kill that LLC quickly and quietly, to avoid the $3360 in fees.
 

#6
novacpa  
Posts:
1228
Joined:
28-Apr-2014 1:16pm
Location:
McLean, Virginia 22101
You/she can thank Gov Tom Wolf for all of this - his Dad Bill Wolf would roll over in his grave
if he knew his Son was complicit in all of this.
I know the family.
 


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