I just found out that my clients formed an llc four years ago

[NECPA in NEBRASKA]

I have a married couple that have been trucking for many years. In preparing their 2011 return, I noticed that their new tractor was titled in the name of an LLC. The last one is 2009 was in the husband's name only. The income has always been reported by the husband as the checks were written to him. I called and asked the wife who the owner of the LLC is and she replied both of them. She replied that they started it four years ago. I asked why they didn't tell me and why the last truck was still in his name ? They didn't think that it was important since it was just for liability purposes, according to their lawyer. I told her that they had formed a partnership and it has not been filed as a partnership at all. They are going to send me the LLC agreement when they get back to town.

Now, I have four years of late partnership returns with penalties and this year isn't even on extension. It doesn't look like it can qualify as a joint venture since they used the LLC. I think that the taxes should be ok, since the would be treated the same way. I don't even know how to handle the old assets still being titled in his personal name.

I have engagement letters and they did not note any changes on the organizers. They are going to love the bills for all of the amended returns and the first year is closed. I am going to scream, because I don't have time to do all of this additional work.

Does anyone know if there is any way to lessen the pain of filing amended returns back to 2008 and all three partnerships?

Thanks for any advice.

[jainen]

>>who the owner of the LLC is<<

Simple joint ownership does not necessarily create a partnership. If only one spouse is active in the business, it is still a sole proprietorship. That's only federal--the LLC has state filing requirements as well.

[Lion EA]

If both partners reported everything on their personal returns in a timely manner, you can get any penalties waived for late filing of the partnership.

Did the LLC own the truck, but the business operated like a sole proprietorship?

[NECPA in NEBRASKA]

I will have to check and see if they are both driving for any reason. She just rode along before, but they didn't tell me about the LLC so anything is possible. They just mail me their info every year and have not changed anything on the organizer. Maybe I will get lucky and she is still just a passenger and I'm not normally very lucky.

[Max W]

My greatest concern would be with the state. Some states require an LLC compliance form or return to be filed each year. It may be that the LLC is in suspension, thus voiding the protection that they thought they had. Usually, you can check on line with the state Secretary of State to see what the status is.

[NECPA in NEBRASKA]

Thanks, I will check that.

[NECPA in NEBRASKA]

I should have checked online earlier. They started it in 2007 with the wife as the manager. That's all that I can see without paying for it. The registered agent is some national registered agent office so they must be filing the bienniel reports, which is why I am not seeing it. I have a feeling that the company that set them up, did not discuss any tax ramifications with them. They are sending me the paperwork when they get back to town later this week.

[kcjenkins]

Also, if they never did any business, until this year, using the LLC, you could consider whether the LLC was ever 'activated' before this year. In which case, it could be ignored for all the earlier years, IMHO. Does not sound like it was 'in business' just because it was formed back then.

[NECPA in NEBRASKA]

I hope that I'm that lucky! They haven't sent me the paperwork yet.