LLC did not file tax returns 4 years; what do I do? 8 members do not want to amend.?

We applied for a FEIN in a small LLC where we each contributed $5,000 to purchase NYSE stock (investment club). We forgot to file any tax returns for 4 years; and the IRS notified us. Do each of us need to file amended returns for the past 4 years, or can the partnership pay the tax at the partnership level?

buy a tube of KY Jelly....you'll want it in prison to help with date night.

Go to jail. Go directly to jail. Do not pass GO. Do not collect anything!


How do you forget to pay taxes for 4 yrs!?! Unless you were in a coma, I think you are screwed. And rightly so.

Had the LLC filed tax return, it would not have paid any tax. Instead, the income and/or losses would have flowed thru to the investors.
Were you required to file? Yes. Had you filed, you could have elected out of filing for the future. But, that's of no use now.
There is a penalty for non -filing = 250/member per year... or $2000. And for year 2007, I believe that penalty is increasing to maybe $85 x 12 x 8 if you do not file.
If everyone has consistently reported their share in the prior 4 years, then it's likely that you can get out of these penalties. But, you will need a tax pro to get you there... in my opinion. IRS will not offer it, but they may forgive it.

this is going to be painful.

did the LLC ever file any returns?

1.
if yes, it has to keep the same filing status as when it started -- thus, if it was filing as a partnership [very common with LLCs] then it must continue to file as a partnership. And then, after it files the returns for the four years, each of you has to file an amended return for each of the four years.

IRS will figure the interest and penalties. My guess is that the LLC will be hit with a penalty for willful failure to file returns (and this penalty will not be tax deductible to you owners). And you'll each get interest due on underpaid taxes [if any] plus penalties for underpayment of tax due.

2. if no, there is a bare chance the LLC can file as a corporation [personal holding corporation type] and pay the tax and interest and penalties. {This means I'd have to look up the IRS regs about how many people can be owners in a personal holding corp for tax purposes.}

Doing this this may require permission from the IRS.

otherwise, it is the same result as above -- four years of back partnership returns, etc.

AND, even if treatment 2 is available, you have to think out whether it is worthwhile.


GL

For four years you forgot. What's wrong with this picture?

I agree with Spock. But I would contact a tax professional to handle this one. All 8 members will have to sign a power of attorney for the tx professional to represent you for the IRS. But the answer is yes, the LLC returns need to be filed and then each one of you will have to file an amended return. This is too complicated to try to do itself.