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					For the latest information on LLC/LLP filing fees see page 4 of
 TSB-M-08(3)I, Summary of Budget Bill Personal Income Tax
                    Changes Enacted in 2008.


            Publication 16(1/03) begins on page 2.
New York State                                                                                     Publication 16
                                                                                                        (1/03)
Department of
Taxation and Finance




          NEW YORK TAX
        STATUS OF LIMITED
     LIABILITY COMPANIES AND
  LIMITED LIABILITY PARTNERSHIPS




                       The information presented is current as of this publication's print date.
                       Visit our Web site at www.tax.state.ny.us for up-to-date information.
Publication 16 (1/03)

Table of contents                                                                                                                       Page

General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Formation of LLCs and LLPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Income and corporate franchise tax treatment of LLCs and LLPs . . . . . . . . . . . . . 4

     Annual filing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

     Payment of the filing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Sales and miscellaneous taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

     Existing partnerships and professional partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

     Other entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Terminating business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Registrations, licenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

     Articles 28 and 29 (Sales and Compensating Use Taxes, and Taxes
     Authorized for Cities, Counties and School Districts) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

     Articles 12-A and 13-A (Tax on Gasoline and Similar Motor Fuel, and
     Tax on Petroleum Businesses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

     Article 18 (Tax on Alcoholic Beverages) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

     Articles 20 and 20-A (Tax on Cigarettes and Tobacco Products) . . . . . . . . . . . . . . . . . . 10

     Article 21 (Highway Use Tax) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

     Article 21-A (Tax on Fuel Use) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
                                                             Publication 16 (1/03)

General   New York State Law allows for the formation of limited liability
          companies (LLCs) and limited liability partnerships (LLPs) in
          New York State (domestic LLCs or LLPs). In addition,
          recognition is given under New York State Law for LLCs and
          LLPs formed under the laws of other states (foreign LLCs and
          LLPs).1

          Certain investment companies that are established and regulated
          under Article 12 of the New York State Banking Law are able to
          organize themselves as limited liability investment companies
          (LLICs). The LLIC option is available only to Article 12
          investment companies that serve as holding companies for
          foreign banking operations. Also, certain trust companies that
          are established and regulated under section 102-a of the New
          York State Banking Law are able to organize themselves as
          limited liability trust companies (LLTCs). The LLTC option is
          available only to Article 3 trust companies that do not receive
          deposits from the general public and are exempt from obtaining
          insurance on deposits and share accounts. Throughout this
          publication, the term LLC includes an LLIC and LLTC.

          Both domestic and foreign LLCs and LLPs may be subject to an
          annual filing fee administered by the Department of Taxation
          and Finance in addition to any fees payable to the Secretary of
          State. A new business that is an LLC or LLP, or an existing
          business converting to an LLC or LLP, may also have
          registration, permitting and bonding responsibilities for other
          taxes administered by the Department. These requirements are
          explained below.

          The Tax Department sends a questionnaire (LLC/LLP Request
          for Information) to all LLCs and LLPs newly registered with the
          Secretary of State. It is very important that the form be filled out
          and returned to the Tax Department. We will use this
          information to establish and update taxpayer account
          information.
          ___________________________
          1 An LLC is an unincorporated organization of one or more persons
          having limited liability for the contractual and other liabilities of the
          business. An LLP is a partnership without limited partners which is
          engaged in the practice of a profession in New York State and which
          registers to be treated as an LLP with the Department of State.


                        -3-
Publication 16 (1/03)

Formation of LLCs       The formation of a domestic LLC is governed by the New York
and LLPs                Limited Liability Company Law.2 The formation of a domestic
                        LLP is governed by Article 8-B of the New York Partnership
                        Law. Both domestic LLCs and LLPs are required to register
                        with the New York State Department of State. In addition,
                        foreign LLCs and LLPs that wish to carry on or conduct business
                        or activities in New York State must also register with the
                        Department of State. The Tax Department does not administer
                        the formation and registration process. Taxpayers who have
                        questions in this area should write to the New York State
                        Department of State, 41 State Street, Albany, NY 12231, call the
                        Department of State at (518) 473-2492 or visit its website at
                        www.dos.state.ny.us.

                        Note: A foreign LLC or LLP that actually conducts business or
                        other activities in New York State is not relieved of its
                        obligation to file tax returns, and, if applicable, to pay the annual
                        filing fee, simply because it fails to register with the Department
                        of State.

Income and              The New York personal income tax and the corporate franchise
                        taxes conform with the federal income tax classification of LLCs
corporate franchise
                        and LLPs. Accordingly, an LLC or LLP that is treated as a
tax treatment of        partnership for federal income tax purposes will be treated as a
LLCs and LLPs           partnership for New York personal income and corporate
                        franchise tax purposes. An LLC or LLP that is treated as a
                        corporation for federal income tax purposes will be treated as a
                        corporation for New York personal income and corporate
                        franchise tax purposes.

                        A single member LLC may choose to be taxed as a corporation
                        or to be disregarded as an entity for federal income tax purposes.
                        If the LLC is disregarded and the single member is an
                        individual, the LLC will be treated as a sole proprietorship for
                        New York personal income tax purposes. If the LLC is
                        disregarded and the single member is a corporation, the LLC will
                        be considered part of the corporation for New York corporate
                        franchise tax purposes.
                        _________________________
                        2 LLICs and LLTCs are also governed by certain provisions of

                        the New York State Banking Law (Chapter 2 of the
                        Consolidated Laws).


                                      -4-
                                                                   Publication 16 (1/03)

                    Sole proprietorships and partnerships are subject to the law, rules
                    and regulations under the personal income tax. In addition, an
                    LLP and an LLC treated as a partnership for New York
                    personal income and corporate franchise tax purposes may be
                    subject to the annual filing fee described below.

                    New York City. Information regarding the tax treatment of an
                    LLC or LLP for purposes of the New York City General
                    Corporation Tax (GCT) and the New York City Unincorporated
                    Business Tax (UBT) is provided in the New York City
                    Department of Finance Memorandum 99-1. This memorandum
                    is available on the NYC Department of Finance website at
                    www.nyc.gov/finance or by calling their taxpayer assistance line
                    at (718) 935-6000.

Annual filing fee   Every domestic and foreign LLP and LLC that is treated as a
                    partnership and has any income, gain, loss or deduction from
                    New York sources 3 is subject to an annual filing fee. The filing
                    fee applies to each taxable year of the entity. For purposes of the
                    filing fee, the New York taxable year of the entity is always the
                    same as its taxable year for federal income tax purposes.

                    The amount of the filing fee is $50 multiplied by the total
                    number of members or partners in the LLC or LLP. However,
                    the fee cannot be less than $325 or more than $10,000 annually.
                    The total number of members or partners includes all resident
                    and nonresident individuals, estates and trusts, and all
                    corporations or other LLCs or partnerships that were members
                    or partners of the entity as of the last day of its taxable year.
                    There is no proration of the filing fee if the LLC or LLP has a
                    short taxable year for federal income tax purposes.




                    ___________________________
                    3 Section 631 of the Tax Law provides, in general, that items of

                    income, gain, loss or deduction from New York sources include
                    those items attributable to (a) the ownership of any interest in
                    real or tangible personal property located in this state or (b) a
                    business, trade, profession or occupation carried on in this state.


                                 -5-
Publication 16 (1/03)

                            A domestic or foreign LLP or LLC that is treated as a
                            partnership that does not have any income, gain, loss or
                            deduction from New York sources, but is required to file a New
                            York State partnership return solely because it has a member or
                            partner who is a New York resident, is not subject to the filing
                            fee. In addition, a domestic LLC or LLP with no New York
                            source income is not subject to the filing fee solely because it
                            was formed under the laws of New York State. Similarly, a
                            dormant LLC or LLP having no items of income, gain or loss or
                            deduction is not subject to the fee. Furthermore, an LLC or LLP
                            that elects to be treated as a corporation for federal income tax
                            purposes is not subject to the fee.

Payment of the filing fee   A domestic or foreign single member LLC is not subject to the
                            filing fee. This is true regardless of its level of activity in New
                            York State.

                            The full amount of the filing fee due must be paid on or
                            before the due date of the partnership return, determined without
                            regard to any extension of time to file. In the case of a calendar
                            year LLC or LLP, the fee must be paid no later than April 15.
                            Every LLC or LLP required to file a New York State partnership
                            return must complete Form IT-204-LL, Limited Liability
                            Company/Partnership Filing Fee Payment Form.
                            Form IT-204-LL is used to remit the filing fee or to indicate why
                            the LLC or LLP does not owe a fee for the current taxable year.

                            If the LLC or LLP is not requesting an extension of time to file
                            the partnership return, Form IT-204-LL, together with a full
                            remittance for any filing fee due, must accompany the
                            partnership return. If the LLC or LLP is requesting an extension
                            of time to file, Form IT-204-LL, together with a remittance for
                            the full amount of the filing fee, must accompany the extension
                            request. There is no extension of time for payment of the filing
                            fee. If the LLC or LLP fails to pay the full amount of filing fee
                            with its extension request, it will be subject to interest, and a late
                            payment penalty of ½% per month, up to a maximum of 25%, on
                            the amount of fee not paid.




                                          -6-
                                                                       Publication 16 (1/03)

Sales and
miscellaneous taxes
Existing partnerships   If an existing partnership becomes an LLC through a conversion
and professional        agreement under section 1006 of the Limited Liability Company
partnerships            Law, there will generally be no need to obtain new registrations,
                        licenses, etc. Also, when an existing professional partnership
                        registers with the Secretary of State as an LLP, there is no need
                        to cancel any existing registrations, licenses, permits, etc., and
                        reapply for new ones. In either case, however, the LLC/LLP
                        should complete the LLC/LLP Request for Information form and
                        return it to the Tax Department. We will use this information to
                        reflect your LLC/LLP status in our records.

                        Exception: For purposes of the taxes imposed under Tax Law
                        Articles 12-A (Tax on Gasoline and Similar Motor Fuel), 13-A
                        (Tax on Petroleum Businesses), 18 (Taxes on Alcoholic
                        Beverages), 20 (Taxes on Cigarettes and Tobacco Products ), 21
                        (Highway Use Tax), and 21-A (Tax on Fuel Use), any addition
                        or substitution of a partner of the registrant requires a new
                        registration. For example, if there is an addition or substitution
                        of a partner in the conversion to an LLC, the LLC must apply on
                        its own behalf for any registrations, licenses or permits required
                        under these Articles.

                        If a partnership was required to file a bond or other security with
                        the Department, a rider or other documentation demonstrating
                        the continued application of the bond to the LLC must be
                        executed and submitted as an addendum to the bond or other
                        security.

                        If a partnership which owns an interest in real property changes
                        ownership in connection with the conversion to an LLC, the real
                        estate transfer tax (Article 31 of the Tax Law) may be imposed.

Other entities          A newly formed LLC (other than one formed through a
                        conversion agreement under section 1006 of the Limited
                        Liability Company Law) must file with the Tax Department the
                        same applications for registration and licensing as required of
                        any other new business. If there are bonding requirements that
                        apply to the business, these must also be met.



                                     -7-
Publication 16 (1/03)

                        When a sole proprietorship or a corporation changes to an LLC,
                        the LLC must apply for any registrations, licenses or permits
                        required by the Tax Law. These will not automatically be
                        transferred from the sole proprietorship or corporation to the
                        LLC. To apply for aCertificate of Authority to collect sales and
                        use tax, to establish a New York State withholding tax account,
                        and for other licensing, permit and registration information, the
                        LLC should call the information phone number listed at the end
                        of this publication or visit the Department’s web site at
                        www.tax.state.ny.us. In most cases, the new LLC cannot legally
                        engage in business until the appropriate registrations, permits,
                        etc. have been obtained. Therefore, this must be taken into
                        account when planning the change from an existing business to
                        an LLC. Further, where business assets are transferred to an
                        LLC from a business or individual required to collect sales and
                        use tax, the LLC must file a bulk sale notification with the
                        Department (Form AU-196.10).

Terminating business    If a business entity will be going out of existence as a result of
                        the formation of an LLC, the terminating business has certain
                        obligations to fulfill. The business must file final tax returns and
                        pay any taxes or fees due to the Tax Department. It must also
                        surrender all certificates of registration, permits and licenses it
                        obtained from the Tax Department.

                        If the terminating business is a New York corporation, it must
                        formally dissolve to avoid further New York State corporate tax
                        liability. If the business is a foreign corporation authorized to do
                        business in New York, it must surrender its authority to do
                        business in New York to avoid further New York State corporate
                        tax liability. Corporate dissolution and surrender of authority are
                        explained in the Tax Department's publication on termination of
                        business corporations (Publication 110).




                                     -8-
                                                                         Publication 16 (1/03)

                          If an ownership interest in real property is transferred by a sole
                          proprietorship or a corporation in exchange for an ownership
                          interest in an LLC, the real estate transfer tax (Article 31 of the
                          Tax Law) may be incurred.

                          If an existing LLC or LLP will be going out of business, it must
                          follow the applicable termination rules described above. In
                          addition, the LLC or LLP should also terminate its registration
                          with the Department of State.

Registrations,            A list of registrations, licenses and permits provided for in
licenses, etc.            various sections of the Tax Law follows.

Articles 28 and 29        C Certificate of Authority (sales and use tax registration).
(Sales and Compensating
Use Taxes, and Taxes
Authorized for Cities,
Counties and School
Districts)

Articles 12-A and 13-A    C Distributor of Motor Fuel Registration
(Tax on Gasoline and
Similar Motor Fuel, and   C Distributor of Diesel Motor Fuel Registration
Tax on Petroleum
Businesses)               C Distributor of Kero-Jet Fuel Only Registration

                          C Retailer of Heating Oil Only Registration

                          C Liquefied Petroleum Gas Fuel Permittee Registration

                          C Importing/Exporting Transporter Registration

                          C Terminal Operator Registration

                          C Residual Petroleum Product Business Registration

                          C Aviation Fuel Business Registration

                          C Retail Seller of Aviation Gas Registration




                                       -9-
Publication 16 (1/03)

Article 18 (Taxes on      C Alcoholic Beverage Tax Distributor License
Alcoholic Beverages)

Articles 20 and 20-A      C Wholesale Dealer License (Cigarettes)
(Tax on Cigarettes and
Tobacco Products)         C Stamping Agent License (Cigarettes)

                          C Chain Store Registration (Cigarettes)

                          C Retail Dealer Annual Registration

                          C Vending Machine Operator Annual Registration

                          C Distributor of Tobacco Products Registration

                          C Wholesale Dealer License (Tobacco Products)


Article 21 (Highway Use   C Highway Use Tax Registration
Tax)

Article 21-A (Tax on      C International Fuel Tax Agreement (IFTA) License
Fuel Use)




                                     -10-
 New York State Department of Taxation and Finance

                    Electronic Services
The NYS Department of Taxation and Finance is continuing its efforts to provide
our customers - the citizens and businesses of this state - with world-class service.
We are using the latest technology to develop innovative ways to better serve you.
Many of these initiatives are available on the Department’s Web site at
www.tax.state.ny.us. Visit our site to learn how our growing list of Electronic
Services can assist you as a taxpayer in finding helpful tax information targeted to
your needs.

General...
     ♦       Find forms and instructions.
     ♦       Visit our Subscription Service page and sign up for our free
             e-mail notifications.
Individuals...

     ♦       e-file your income tax return.
     ♦       Determine which income tax form to file.
     ♦       Pay your income taxes by credit card.
     ♦       Apply for an income tax installment payment agreement.
     ♦       Apply for an automatic time extension to file your return.
     ♦       Check the status of your income tax refund.
     ♦       Review your estimated tax account balance.

Businesses...
     ♦       Report newly hired and rehired employees.
     ♦       Use the sales tax penalty & interest calculator.
     ♦       Review your corporation tax payment summary.
     ♦       Review your promptax withholding tax payment summary.
     ♦       Search the corporation tax issuer’s allocation percentage inquiry.



                     www.tax.state.ny.us
Publication 16
    (1/03)




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