Did an LLC seller's-permit application need detailed identification for a nonmanaging foreign-corporate member or California registration for that corporation?

Plain-English summary

A California-registered domestic LLC's seller's-permit application was delayed because a nonmanaging Kansas corporate member had not supplied California Secretary of State information showing that it was recognized in California. Counsel understood that the member had not made California retail sales and would not engage in California retail business merely through its LLC affiliation.

The district traced the delay to October 21, 1996 Operation Memo 1048, which addressed verification of identification on seller's-permit applications. The memorandum itself is absent. Senior Tax Counsel Patricia Hart Jorgensen said the LLC had already supplied its own federal employer identification number, which the operations memo accepted as identification.

Counsel described Compliance Policy and Procedures Manual section 230.055 as requiring detailed name, address, telephone and identification information only for LLC members who would manage the company. She described section 225.020's limited-partnership analogy as requiring general partners on the application and a list of limited partners for the Taxpayer Records Section. Because the foreign corporate member was not involved in management, counsel said its FEIN was not technically required. The source switches from the member's redacted label to “AMC” in that sentence without explaining the change.

On the district's separate recognition question, Revenue and Taxation Code section 6005 defined “person” to include any corporation. Counsel said nothing in that section required California incorporation or Secretary of State registration, and quoted proposed Annotation 415.0110's earlier treatment of out-of-state LLCs as persons. She concluded that a corporation authorized under the law of its home state or country did not need California registration solely to acquire recognizable existence for California sales and use tax purposes. The qualification “sole purpose” matters: the memorandum did not decide whether some other law required registration.

The memorandum answers the legal questions but does not include the January 28 request, application, operations memo, manual sections, entity records or a later permit. It does not say whether the district issued the LLC's delayed permit or requested anything else.

Source posture and current references

The live 410.0175 annotation retains only the manager-information and nonmanaging-corporation FEIN conclusions. It omits the district's Secretary of State demand, the LLC's own FEIN, limited-partner procedure, the assumptions about the member's California activity, section 6005 analysis, proposed Annotation 415.0110, sole-purpose limitation and missing permit outcome.

The current official section 6005 page still includes both a limited liability company and a corporation within “person.” That definition alone does not resolve current foreign-qualification or permit-application requirements. The official 415.0110 annotation still contains the quoted 1993 out-of-state LLC proposition but now adds a note flagging a statutory change concerning California LLCs. Its distinct owner-liability discussion is not part of this 1997 memorandum's holding.

The official three-page PDF has a clean native text layer and one repeated small stencil per page, so no OCR was required. Two fresh direct downloads and their default text extractions matched exactly. The original-text section remains byte-identical to its committed version and matches the fresh official extraction after removing only the extractor's terminal newline and form feed.

What this means for you

LLCs, foreign corporate members, and tax professionals

Identify who actually manages the LLC and follow current application instructions. Do not confuse recognition as a statutory “person” with foreign qualification, tax nexus or permission to conduct business. The memorandum addresses recognition solely for sales-and-use-tax purposes and supplies no current filing rule or final permit outcome.

Common questions

Q: Which LLC members required detailed permit information?

A: Under the manual procedure described in the 1997 memorandum, the members who would manage the LLC.

Q: Was the nonmanaging corporate member's FEIN technically required?

A: Counsel said no because the corporation was not involved in management. The LLC itself had already supplied its own FEIN.

Q: Did a valid foreign corporation need California registration merely to be a person?

A: Not solely to acquire recognizable existence for sales-and-use-tax purposes, according to the memorandum. It did not decide other registration duties.

Q: Did the source show that the LLC ultimately received its permit?

A: No. It records a delay and counsel's answers but no later application processing or permit issuance.

Q: Does the live annotation include the foreign-corporation recognition conclusion?

A: No. It retains only the LLC manager-information and nonmanaging-member FEIN points.

Citations and references

• California Revenue and Taxation Code § 6005
• Operation Memo 1048, issued October 21, 1996
• Compliance Policy and Procedures Manual §§ 230.055 and 225.020
• Proposed Business Taxes Law Guide Annotation 415.0110, dated October 18, 1993
• January 28, 1997 district memorandum; LLC permit application; member's entity records; operations memo; full manual sections; and later permit-processing records — described or implicated but not included

Verbatim support

From the official Senior Tax Counsel memorandum:

an LLC applying for a seller's permit is only required to provide detailed information, i.e., name, address, telephone number, identification number, for those members that will be managing the LLC.

Thus, if AMC is not involved in the management of the LLC, technically, its FEIN is not required.

It is not necessary for a foreign corporation to register with California's Secretary of State for the sole purpose of acquiring a recognizable existence in this state.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 410.0175
• Original supporting opinion: 410.0175 PDF
• Current references: Revenue and Taxation Code § 6005 and Annotation 415.0110

Original ruling text

STATE OF CALIFORNIA

410.0175

STATE BOARD OF EQUALIZATION

Memorandum

To:

Mr. Michael D. Littrell
Principal Compliance Supervisor
X------- District

From:

Patricia Hart Jorgensen
Senior Tax Counsel

Subject:

Limited Liability Companies and Foreign Corporation

Date:

March 4, 1997

This is in response to your memorandum of January 28, 1997 in which you inquire whether a Kansas corporation which has not registered with California's Secretary of State is considered an entity or person under California's Sales and Use Tax Laws. As I understand the situation, there was a delay in issuing a seller's permit to X----------, a Domestic Limited Liability Company (LLC), registered as such with California's Secretary of State. This delay was due to the fact that one of X---------’s members, Y------------, a Kansas corporation, had not provided any information from California's Secretary of State to show that it was "a recognized entity in the state of California." As I understand the facts, Y----------, a non managing member of X--------- has not engaged in retail sales in California nor will it engage in business as a retailer in California by virtue of its affiliation with X----------. The source for the delay in processing X--------’s application for a seller's permit was Operation Memo 1048, entitled "Requiring Verification of Social Security Numbers and Driver's License Numbers for Seller's Permit Registration," issued on October 21, 1996. This memo explains that collection efforts have been hampered by the omission or inaccuracy of social security numbers and driver's license numbers on the applications of persons signing the certification section of the application. Under the guidelines of this memo, individuals, and in the case of partnerships or corporations, each partner or corporate officer, will be required to furnish verification of their social security number or driver's license number. This memo further explains that federal income tax numbers (FIEN), California Identification cards, passports, visas, paycheck stubs or income tax returns may be substituted for driver's license numbers or social security numbers. On the basis of this operations memo, it was your office's conclusion that X---------- was required to register with the Secretary of State's Office in order to verify that it was recognized as an entity by the state of California.

STATE OF CALIFORNIA

410.0175

STATE BOARD OF EQUALIZATION
It is my understanding that X---------- provided its FEIN number at the time the application was made for a seller's permit. Pursuant to Operations Memo 1048, this is a suitable form of identification. However, based on the Board's Compliance Policy and Procedures Manual (CPPM), section 230.055, entitled Limited Liability Companies, an LLC applying for a seller's permit is only required to provide detailed information, i.e., name, address, telephone number, identification number, for those members that will be managing the LLC. This section further provides names of those members that will not be involved in management would be identified under the guidelines for seller's permit applications for limited partnerships. CPPM section 225.020, under the sub heading "Limited Partnerships," explains that only general partners need to be listed as partners on the seller's permit application and that “A list of limited partners should be obtained and forwarded to the Taxpayer Records Section for file information.” The rationale for this position is, that, while a limited partner contributes to the partnership capital and shares in the profit, it “has no powers in the control of the business.” Thus, if AMC is not involved in the management of the LLC, technically, its FEIN is not required. The foregoing aside, I will now address your concerns as to whether or not a foreign corporation is recognized as a person in the state of California. Revenue and Taxation Code section 6005 explains that the term" person" includes: “[A]ny individual, firm, partnership, joint venture, limited liability company, association social club, fraternal organization, corporation, estate, trust, receiver, assignee for the benefit of creditors, trustee, trustee in bankruptcy, syndicate, the United States, this state, any county, city and county, municipality, district, or other political subdivision of the state or any group or combination acting as a unit.” (Emphasis added.) As drafted, section 6005 provides that a person includes any corporation. There is nothing in this section which mandates that in order to be considered a person, a corporation must be incorporated under the laws of California or registered with the Secretary of State. Proposed Business Taxes Law Guide Annotation 415.0110 (10/18/93), written before California authorized the formation of LLCs, illustrates that an entity recognized under another state's law will be considered a "person" under California Sales and Use Tax Laws. This proposed annotation provides, in pertinent part: “At least eight states have authorized a business structure called limited liability companies. These organizations are neither partnerships nor corporations. This state has neither recognized nor required this ownership concept. However, such organizations are clearly 'persons' under section 6005....” Thus, any corporation authorized under the laws of its state or country of origin is considered a "person" for purposes of California's Sales and Use Tax Laws. It is not necessary for a foreign corporation to register with California's Secretary of State for the sole purpose of acquiring a recognizable existence in this state.

STATE OF CALIFORNIA

410.0175

STATE BOARD OF EQUALIZATION
If you have any further questions, please feel free to contact me at ATSS 4672291.

PHJ:cl

cc:

X--------- District Administrator
Ms. Charlotte Paliani (MIC:70)