An email came in recently on the North Carolina Estate Planning Section LISTSERV. It discussed how a family owned LLC received a notice from Wake County Revenue Department, that said “This office has determined that the deferred taxes shown on the enclosed statements have lost their eligibility status for deferment.” Approximately $15,000 came due in delinquent non-deferred tax.
The problem is that the Wake County Revenue Department interpreted the application of the quoted statute by looking at the Secretary of State website for the "business purpose" of the LLC. An LLC is created by filing Articles of Organization with the Secretary of State. Articles of Organization do not require, and generally do not state a business purpose. So the Department took a look at the Annual Reports. Their position was that if the Annual Report states other than “Agriculture, Horticulture or Forestry”, then the deferred taxes become due.
The Sender of the email strongly recommended that the Articles of Organization / Articles of Incorporation for entities holding real property in special use deferred status, state in bold letters, AGRICULTURE, HORTICULTURE OR FORESTRY as the business purpose.
For some time now, I have been making sure the Operating Agreement for the entity states its Special Use as its business purpose. This recommendation to add it to the Articles sounds reasonable.
No comments:
Post a Comment