CA FTB Penalties on Unregistered Out of State LLCs

[Hardy Hodges]

Does anyone have practical experience with CA FTB catching unregistered disregarded LLCs, and how onerous are they on penalties? Since the LLCs are disregarded, they dont even explicitly appear on tax returns on Sch E. In practice would they apply penalties by "the book", since LLC formation, or be somewhat lenient? For example, suppose a CA resident formed a disregarded FL LLC back in 2015 to hold an investment property there, and was unaware of the CA filing requirement. Would the FTB send a bill for $800 for each of the last years plus penalties for each of those years? How bad would the penalties be? Or might they just bill $800 for current year, possibly with some penalties, and move on? Advice for anyone in CA who has unwittingly had an out of state LLC for many years without realizing CA's FTB rules on registering out of state LLCs? Proactively notify FTB? Dissolve the LLC? Thanks!!