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CA LLC FORMS: CA 568, CA FTB3522, CA FTB 3536, CA FTB 3537


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Hi friends,

Hope some one can help with this.

CA LLC got notice for late paying tax.   For 2020, the company had gross sales $623,967.  on 03.14.2021 I filed CA 3537 with $800.00, efile success; then, I filed CA 3536 with payment of $2,500 on 05.02.2021 but was rejected; then, I filed CA 3522 with payment of $800 and CA 568 with payment of $1700 on 05.02.2021 and both were success.

I was so confused on CA FTB 3536 and CA 3522, those forms seem like you use current year software to pay next year as estimated tax, so when should I claim those payments as credit?

My understanding is: the CA charges LLC two type of tax, one is flat at $800.00, then based on sales volume they assess another LLC tax, both are based on currently filing year, so what CA 3536 and CA 3522 for?

On 2020's  CA 568, box 7, it says: 

image.png.6535372ec82a3ca7cf7d933b07cc8a4f.png

The amount of FTB3522 FTB 3536, and FTB3537 were from my 2020 software or 2019 software?

 

Thank you so much!

 

Kateimage.png.6535372ec82a3ca7cf7d933b07cc8a4f.pngimage.png.6535372ec82a3ca7cf7d933b07cc8a4f.png

 

 

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Katherine,

Form 3522 is used to pay the $800 annual fee (notice they don't call it a tax?) that CA imposes on all LLC's regardless of income.  It must be prepaid and the voucher you send in with the payment is the 3522.   Most small LLCs only pay the $800 and so only use the 3522 for that one time per year payment.  

The 3536 is used to pay the gross revenue tax.   Think of the 3536 as a 1040ES.   Estimate the amount of revenue and send in the payment.   Larger LLC's like yours will be in this situation.  

Form 3537 is the extension form.   If you make an estimated payment of tax with the filing of the return, you don't use either of the above, just the 3537.

Hope this helps.

Tom
Modesto, CA

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Finally a post I have the answer to! The reason that you received the notice is because California LLCs have a very early payment due date. Payment for the tax AND the fee is due during the tax year itself, not when the return is due. It sounds like the payments made were applied towards 2021 (unless noted otherwise) and will be claimed on the 2021 tax return (due 3/15/22 or 4/15/22 depending on the classification). Tom has the right idea in general but I think he got mixed up with the annual fee and tax. The fee (paid by 3536) is based on gross revenues while the tax (paid by 3522) is $800 regardless. I like the analogy of thinking of the 3536 in the context of 1040ES. It's obviously hard to figure out what your gross revenues will be when you're only a couple months into the year so it's typically better to overestimate. That said, penalties will not be imposed if the estimated fee paid by the due date is equal to or greater than the total amount of the fee of the LLC for the preceding taxable year

A couple things to note about the LLC tax and fee: the tax is NOT deductible on the state-side but the fee is deductible. Of course both are deductible federally but it's an easy mix up state-side that will result in a notice if not properly taken into account. Also, the due dates on the various forms depend on how the LLC is classified (partnership, SMLLC, etc) and who owns it (entity/individual vs pass-through). Be careful if the LLC is classified as an S-Corp as you'll need to file different forms/amounts.

You can reach out to the FTB to reclassify payments made so that they're applied to the correct year if the forms e-filed to them were for the incorrect year. Keep in mind that there's only a few more days to make payment for the 2021 LLC fee. Happy filing!

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Thank you so much, Mr. Tom and Mr. Mai!   I started to get some idea now.  I saw the software label the 3522 as year 2021.   On the 568, when I click the payment (see above screen shot), it lead to 3522.  I thought 2021 was not finish yet, how come it linked to 2020 568.  Is that mean I am always pay advance?  Just curious, can I claim refund if someday I close the business because that won't be used anymore?

This is their first time to get penalty for late pay?  Does CA offer first time forgiveness?  The old CPA passed away last year, is that a good excuse?  

Thank you both so much again!

 

 

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