Updated
October 9, 2022
California LLCs that paid the Franchise Tax Board's unconstitutional out-of-state income fee between 1994 and 2006 could claim a refund from this $22 million settlement, which is now closed.
What's This Settlement About?
A proposed class action settlement has been reached against the California Franchise Tax Board, also known as the FTB. The settled class action lawsuit challenged LLC fees imposed on business owners in California by the FTB. Specifically, fees that were charged to California LLCs from 1994 to 2006.Under a statute that was administered by the California FTB, LLCs had to pay an annual fee based on their worldwide total income, regardless of whether some or all of that income was derived from activities outside of California. Once the class action lawsuit was filed, the court decided this law was unconstitutional and unfair to LLCs and their proprietors whose income was partially or wholly derived from activities outside of California. The class action settlement aims to refund the unfair and unconstitutional portion of the taxes levied for international and out of State revenue.
Status
Claims Closed
Claim deadline passed July 5, 2022
Claim Deadline
July 5, 2022 (Passed)
Settlement Fund
$22,000,000
~$15M net · higher payment with documentation
Proof Required
No
Documentation optional — increases the payment
How Do I Qualify?
All LLCs that have received their income from business operations solely within California, or within and without California, or solely without California, that have paid the FTB tax and filed timely claims for a tax refund of the levy, that have had their claim for a refund denied. For more details, please read the FAQ on the official class action administration website.What Can I Get?
Assuming the court provides a final approval for the settlement, a $22 million Settlement Fund will be created. After attorneys' fees and services the net settlement fund will be at least an estimated $15 million and will be distributed to Class Action Members who submit valid claims. While Class Members who can support their claims with documentation will receive a higher payment per claim than those who cannot, documentation will not be required to be eligible for a refund.How Do I File a Claim?
The claim deadline was July 5, 2022, and this settlement is now closed to new claims. Claim forms could be submitted online or by mail. The Court held a hearing at 10:00 a.m. on August 2, 2022.Free settlement alerts
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