Free Market Forever

One of my greatest fear is owing money to American.

Imagine, I borrow a DVD. Then I agree to pay $10 fine per day if I am late to return it. Say I forget about the DVD. I may have returned the DVD but somehow the rental company didn’t receive it or make some management issue.

Imagine if years gone buy. I forget about it. Letters do not arrive to me. I don’t get nothing.

Then 10 years down the road, I owe $1 million over a DVD that worth $10.

Scary?

This is what’s even scarier. What about if after you owe $1 million, you can’t stop the subscription until you pay the $1 million?

If I knew I am owning money I would have just pay it but no, I don’t. No contact, whatsoever. Then boom.

It almost happened to me a few years ago. Some $5 hosting bill me for well, $5. However, there are interests and late fee attached if I don’t pay. However, every effort to pay is futile. I contacted the corporation several times and got no reply.

Then 10 years latter, somebody go to court ordering to pay $1 billion dollar. Scary…

Turns out the biz realize my request and simply cancel the debt.

Turns out that businesses often need a way to make people comply. However, few, if any has that malicious intent in mind.

Well, one day one of those night mare come true. At least might.

I opened an LLC in delaware. I wasn’t aware of LLC’s annual fee before. I think before there was none or pretty low. In anyway I wasn’t aware of it.

The biz deals went sour and rather than dissolving the LLC I sort of forget about it. I didn’t know about annual tax. Why should I dissolve it? Maybe one day it’s useful.

Well, US goes into recession. And their laws changes. One day I got a bill that I owe $600 of LLC tax

If I knew about LLC annual tax I would have dissolve it.

Now this is the scary part. Basically LLC tax is a service fee. I registered an LLC and so I owe tax. The thing is the LLC is absolutely worthless for me because the deal went bad.

So, I guess a rational thing to do is to just close the LLC and stop the useless subscription. Well, the only way to close the LLC is to pay the tax owed first. It’s like renting expensive magazine you just can’t quit.

Should I pay the $600?

I asked delaware tax department and this is the conversation.

Sandra: will go void

Lindsay: Hi

Lindsay: Okay, so if I do not pay franchise tax my LLC will go void

Lindsay: Now, will that affect the owner in anyway?

Lindsay: Can the owner go to jail, get his assets seized if he has US assets? Can the owner later open an LLC in delaware again?

Sandra: The llc will go void after 3 years but will continue to accrue tax over the years

Sandra: We would not collect from my office

Lindsay: What do you mean by “we would not collect from my office?”

Sandra: Many years up the road it could be turned over to the attorney generals office.

Lindsay: and then?

Sandra: My tax office does not do collections.

Lindsay: Okay.

Lindsay: So void corporation still “owe” franchise tax

Lindsay: Can you point me to the law regarding “void” corporation? What happen to it?

Lindsay: Also what would attorney general do?

Lindsay: to an owner of void LLC?

Sandra: llc’s continue to accrue tax until they file a cancellation form

Lindsay: Regardless of void status.

Lindsay: How will that affect the owner? Will the owner go to jail?

Sandra: There is no one who collect at this time but someone could be elected in the future that will collect. I do not know what will happen in the future.

Lindsay: Oh I see.

Lindsay: Along time ago there was an LLC named ———– llc

Lindsay: I wonder what’s the status for that? It seems to have just disappeared

Lindsay: It’s made 10years ago

Sandra: You will need to check with corporate infromation on that i can transfer you.

Lindsay: Hang on

Lindsay: Okay, so that’s pretty much the risk for just abandoning an LLC without properly closing it.

Sandra: yes

Lindsay: Sometime in the future, someone elected may see, a ha, we have 200k abandoned LLC owning $5k each let’s fill state’s cover

Sandra: I can not guess at what an elected offical may do in the future

Lindsay: Yes

Lindsay: Anything is possible

Lindsay: Some site says taht delaware state don’t even know who the owner of an llc is.

Sandra: That information is not given to my tax office.

Lindsay: I wonder how that’s possible? Then any asset owned by LLC can be claimed by anyone who claim to be the owner then

Sandra: I do not know.

Lindsay: It’s okay.

Lindsay: You answered enough

Lindsay: Just curious.

Lindsay: Since when Delaware charge franchise tax?

Sandra: llc pay llc tax not franchise tax.

Lindsay: Oh.

Lindsay: Since when Delaware charge llc tax?

Lindsay: I mean it wasn’t there 10 years ago

Sandra: around 1998

Lindsay: Oh so there was always some franchise tax in delaware

Lindsay: It just recently go up

Lindsay: I mean llc tax

Sandra: yes

Sandra: yes

Sandra: yes

Lindsay: Is there any way to close the LLC first and “deal” with owed llc tax latter?

Sandra: no tax has to be paid at the time of cancellation

Lindsay: I see

Lindsay: How many voided LLC out there in Delaware now, among the 800k registered there?

Lindsay: Just curious

Sandra: Is there anything else I can assist you with today?

Lindsay: Is there many voided LLC out there?

Sandra: some

Lindsay: I see.

Lindsay: Well, I guess that’s all.

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