Category: News

Every new business must decide its form of ownership. From sole proprietorship to corporation, there are several ways to organize your business, each with its own advantages and disadvantages. California recently provided a new advantage for limited liability companies (LLCs), limited liability partnerships (LLPs), and limited partnerships (LPs). Normally, a minimum franchise tax of $800 is imposed annually on the aforementioned entities. However, California will now waive the minimum tax for the first year of the entity’s existence, under two conditions.

First, the LLC, LLP, or LP in question must be registered with the California Secretary of State on or after January 1, 2021 but before January 1, 2024. Second, the waiver applies only to business entities with gross receipts of less than $250,000 for the year (rounded to the nearest dollar). The tax is scaled to gross receipts (not net income or profits), with $900 incurred for gross receipts from $250,000 to $499,999, $2,500 for gross receipts from $500,000 to $999,999, $6,000 for gross receipts from $1,000,000 to $4,999,999, and $11,790 for gross receipts of $5,000,000 or more.

To summarize:  If the LLC was registered on or after January 1, 2021, and has annual gross receipts of $249,999 or less, the minimum tax of $800 would be waived.  However, if the same LLC happened to have annual gross receipts of $250,000, it would owe a minimum tax of $900.  

In a 6-3 vote, the US Supreme Court struck down a California law that forced non-profits to annually disclose their major contributors (i.e. those who contribute more than $5,000). The case, Americans for Prosperity Foundation v Bonta, was split down liberal/conservative lines, where Chief Justice Roberts wrote for the plurality, holding that the disclosure requirement infringed on the Freedom of Association found under the First Amendment.

Drawing from history, Chief Justice Roberts pointed to how states such as Alabama had previously used similar laws to punish contributors to nonprofits that enriched the lives of minorities, such as the NAACP. Even though sent to the state government confidentially, Chief Roberts highlighted the potential that these records could be accidentally leaked or posted online, and therefor risked reprisal to those who contributed to unpopular organizations. He acknowledged these laws were created in California to fight fraud; however, he then pointed to the alleged lack of evidence that California’s law alone had successfully assisted with any “investigative, regulatory or enforcement efforts.”

Dissenting opinions stressed the incompatibility with using judicial precedent meant to protect civil-rights offences to those created to assist with financial fraud, as well as the impossibility to provide evidence that this law, as one tool of many, to fight fraud was not helpful. However, the Court was obviously not swayed. Therefore, for now, non-profits will not need to provide California with their list of donors. Even so, this list will still likely be required for the federal government, i.e. the IRS. As such, the administrative perks of having this law struck down is so far seen to be minimal.

In 1989, California passed the Roberti-Roos Assault Weapons Control Act (codified as Cal. Penal Code §§ 30500-31115) which, in effect, made it illegal to own or semi-automatic firearms (they were classified as assault weapons). Currently referred to Assault Weapons Control Act (“AWCA”) this ban has been challenged multiple times in its history and continues to be challenged today. In Kasler v. Lockyer (2000) and Harrott v. Kings County (2001), the California Supreme Court upheld the AWCA with relatively minor adjustments due to vagueness within the law.[1] Dissatisfied with California state court rulings, the AWCA began to be challenged in federal court under Second Amendment defenses.

Perhaps the most memorable, as well the most recent, federal case is Miller v. Bonta (2021).[2] In Miller, Judge Roger Benitez compared the AR-15 rifle to the Swiss Army Knife, calling it “a perfect combination of home defense weapon and homeland defense equipment”.[3] The Miller Court proceeded to declare the AWCA unconstitutional under Second Amendment stating “[t]he banned “assault weapons” are not bazookas, howitzers, or machineguns…[t]hose arms are dangerous[.]” Though declared unconstitutional, the Miller Court’s order was “stayed pending resolution of Rupp v. Bonta, No. 19-56004” by the 9th Circuit on June 21.[4] Rupp is a similar case which, in turn, has been “held in abeyance” until the resolution of Duncan v. Becerra, Docket No. 19-55376.[5] Duncan was decided on August 14, 2020 by the 9th Circuit invalidating the AWCA only to vacate its decision on February 25, 2021 in preparation for an en blanc 9th Circuit decision. Though confusing, what this means is that the fate of the AWCA will likely be decided by the 9^th circuit in their en blanc (en blanc meaning, all judges of a particular court will hear the case appeal) decision of Duncan v. Becerra, not rather than Miller v. Bonta.

In other words, for now, AWCA is in full effect and the AR-15 rifle remains banned. [*The Burton Law Firm is an amalgamation of various attorneys with various beliefs and opinion. The firm takes no political position and merely provides analysis of the current law.] For more information, contact info@burtonlawfirm.com or call 916-822-8700 for a consultation.

[1] Kasler v. Lockyer, 23 Cal. 4th 472 (2000); Harrott v. Kings County 25 Cal. 4th 1138 (2001).

[2] Miller v. Bonta, Case No. 19-cv-1537-BEN (JLB) (S.D.Cal. 2021). Available here.

[3] Id at 1

[4] http://cdn.ca9.uscourts.gov/datastore/general/2021/06/22/21-55608-order.pdf.

[5] https://michellawyers.com/wp-content/uploads/2021/03/2021-02-25-Order-Holding-Case-in-Abeyance-Pending-Duncan.pdf.