Got a letter from the Alabama Department of Revenue today. Says my LLC owes a $50 minimum business privilege tax plus a late penalty. I formed the LLC last year but didn't really start doing business until this spring. I thought the first year was prorated or something. Has anyone dealt with this? I'm worried there's more coming.
Tax Notice
My Alabama LLC received a tax letter I wasn't expecting
The minimum privilege tax is due every year regardless of revenue. If you registered the LLC in Alabama, you owe it. The first year isn't automatically waived. You might have missed the initial return.
Did the letter specify which tax year? Sometimes they catch up on prior years all at once.
It says tax year 2023. I formed it in October 2023. I didn't file anything because I assumed there was nothing to report yet.
That's the issue. Forming the LLC triggers the registration and the tax obligation. Even if you had zero income, the minimum tax applies. You likely need to file a business privilege tax return for 2023 and pay the $50 plus penalty.
Also check if you need to file a zero return for 2024. If you're still active, the tax is due annually.
Not a lawyer, but I went through something similar. The penalty can be waived if you call and explain it was a first-time mistake. They're usually reasonable if you pay the base tax promptly.
Is the letter from ADOR or from a collection agency? That changes how you should respond.
It's directly from ADOR. I'll call them tomorrow. Should I go ahead and pay online first or wait until I talk to someone?
Pay the $50 now. The penalty is separate, but paying the base tax shows good faith. Then call about the penalty.
Don't ignore it. ADOR can suspend your LLC if you let it sit. I'd also check your account online to see if there are other outstanding returns.
And make sure your registered agent address is current. If they sent the letter to an old address, you might have missed earlier notices.
One more thing: the business privilege tax is based on your net worth in Alabama, but the minimum is $50. If you have minimal assets, that's all you owe. No need to panic.
Thanks, everyone. I'll pay the $50 and call about the penalty. Appreciate the help.
Also, if you haven't filed an annual report with the Secretary of State, that's a separate thing. Don't confuse the two.