Close an unused Delaware LLC without paying franchise tax?


3 years ago, I created a Delaware LLC with a partner with the purpose of running an online business through it, that we were working on. Before we ever got off the ground, it turned out the partner was not trustworthy, and we stopped our plans together. At the time, I considered closing the LLC, but since it was already paid for, I figured I would keep it around for a while and see if I could use the LLC for other projects. I never did. I am not a US citizen but from the EU - so was my business partner at that time.

Now, 3 years later, I looked into cancelling it, since I will never use it in the future. I contacted the company that set it up for me in the first place, and they say the company owes 2 years of franchise tax + a 200$ fee to Delaware for cancelling the company. That plus some admin fees turns into about 1000$.

A dime never passed through this company, there was never any activity whatsoever, and I frankly have better things to do with 1000$.

  1. Will there be any personal consequences for me as an individual, if I chose not to pay?
  2. If I want to open a new LLC (in Delaware or some other state) in the future, will this present a problem?

I do not want to be stopped in the airport next time I enter the US and held back for tax owed to Delaware - but I am not inclined to throw more money out the window on this, than I already have.


asked May 1 '13 at 06:09
Valdemar Petersen
6 points

1 Answer


I've had clients let their LLCs expire in this fashion and they've had no personal consequences nor any problems creating new LLCs after the fact. As far as I've seen, Delaware (or any other state for that matter) does not go after individuals for unpaid franchise taxes in an abandoned LLC. You'll receive notices of taxes due, but the SecState/Franchise tax board can't enforce it on individuals. No, you will not be stopped at an airport for back franchise taxes owed to the State of Delaware for a Delaware LLC. They are not the IRS, and LLC franchise taxes are not enforced the way personal or corporate income taxes are enforced.

I've heard lawyers advise dissolving LLCs where actual business transactions have been involved because of contractual liability implications but have not heard any word on inactive LLCs. Disclaimer: I am not a lawyer, so this is not legal advice, but I am telling you what I have seen through experience.

answered May 1 '13 at 07:20
Henry The Hengineer
4,316 points

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