CA first year LLC fee exemption

[Summer2021]

Under the new rules, for the period starting January 1, 2021 and ending December 31, 2023, any LLC, LP, or LLP that files, registers, or organizes to do business in California is exempt from the state's $800 minimum annual franchise tax for its first taxable year. 

Below is from FTB website I copied word by word:

Exceptions to the first year annual tax

For tax years beginning on or after January 1, 2021, and before January 1, 2024, LLCs that organize, register, or file with the Secretary of State to do business in California are not subject to the annual tax of $800 for their first tax year.

However, Proseries continues to generate the $800 franchise tax on CA form 568.

Does anyone have any suggestions to fix this?  I overridden the $800 payment, but Proseries gave me an e-file error message.

[Just-Lisa-Now-]

theres a checkbox somewhere that asks if this is your first year, when you check that, it takes away the 800.

[Just-Lisa-Now-]

I just went and looked at a clients first year 568 from 2021, Did you click the Initial Return box on the front page of the 568?

[malrawi]

I have the same issue, i.e. the 800 is not waived despite that the "initial return" checkbox is checked on form 568. To add more confusion, I cancelled my LLC on the same year. The form does not allow me to check the "final return" checkbox, and the 800 is not waived. Any suggestions?

[willatbird]

I'm encountering the same thing in Lacerte. Checked the Initial return box but the $800 still comes up and there's an efile error message. Maybe someone from Lacerte could chime in?

[sjrcpa]

"Maybe someone from Lacerte could chime in?"

That's a BIG maybe.

[Intuitjhaze]

@willatbird can you share what the e-file error message is that you're receiving?

@malrawi are you getting the same error message?

[sjrcpa]

@willatbird You made a liar out of me. 😃

[malrawi]

Thanks,@Intuitjhaze. I am not getting an error message. My issue is that the $800 fee is not being waived despite that this is the first time I am file/submitting the form for my LLC. Also, although these are checkboxes, they are acting like radio buttons, by forcing me to selecting one options.. in my case, I think, I need to check 2 boxes (initial and last/final), since this I cancelled the LLC in the same year I created it.

[willatbird]

This is a ProSeries discussion so I'm probably in the wrong place.

I can put in a -1 for the $800 fee and it goes away, but it doesn't get rid of the error message. I'm hoping that when I try to file it the error message can be ignored.

[HEYSOAPY]

Lets see if this will post. with the image.  

Here is how we fixed the error.  

Go to form 568

Click on the $800 that is in the line 2023 if that is the inital year in question.  It will take you to the page where you can indicate it is an initial return.  scroll down towards the bottom of the page and you will see "Form565/Form568 $800 tax [Override]" PUT -1 in this box.  

Check Return. 

Hope that helps.