California Senate Approves LLC Withholding Tax Exclusion

Law360, New York (May 2, 2014, 6:24 PM EDT) -- California’s state senate on Thursday unanimously approved a bill that would exclude limited liability corporations from the state's personal income tax withholding requirements.

Senate Bill 1131, which now heads to the other chamber of the state’s legislature, would exclude LLCs recognized under federal law as partnerships from California's personal income tax, changing the statutory definition of “employee” to exclude members of an LLC as it relates to personal income tax withholding requirements.

In effect, the change would free an LLC from having to remit personal income...
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