Missing CA Form 568 for 2023–2025 despite "Accepted" status – Why did this happen?

[TI1973]

I am looking for clarity on why my California Form 568 (LLC) was not filed for the past three years and how to prevent this in the future.

My filing history:

2022 (Desktop Business): As it was my first year, the software gave clear instructions to "Print and Mail" the package for Form 568. I followed those instructions and filed successfully.　My business was originally started out-of-state and was transferred to California that year. It is a single-member LLC and a very simple business.

2023 (Desktop Business)

2024 (Online Business)

2025 (Online Expert Assist Business Sole Proprietor 2025)

The Issue: For 2023, 2024, and 2025, I received no instructions to mail any documents during the E-file process. Furthermore, I received notifications stating my "California filing was Accepted." Based on this, I believed everything (including Form 568) had been filed electronically. However, I recently discovered that Form 568 was never received by the FTB for these three years.

My Questions:

Why did the software stop providing the "Print and Mail" instructions after 2022?

Why did I receive an "Accepted" status if a critical part of the business filing was missing?

What is the best practice for next year to ensure Form 568 is filed correctly alongside my personal return?

[AmyC]

1. In 2022, it was your first year in CA so you had to print and mail the 568. The following years, you were not required to mail the form. You went through the software very carefully and correctly marked the LLC in CA.

2. The 568 is not part of your personal return. It is a separate "entity" filing for your business. Accepted was for your 540 personal return.

3. The 568 requires you pay $800 per year and form 3522 for the LLC voucher would be part of your return. When you go through the CA portion of your personal return, you must select LLC rather than sole proprietor. A sole proprietor does not file the 568.

Follow these steps to create the 568:

1. Go to the State Taxes tab and start the California interview.
2. Look for the section titled "Income and Adjustments."
3. Find "Business Profit or Loss Adjustment" (or sometimes "Rental and Royalty Adjustment").
4. You MUST find the question: "Is [Business Name] owned by a Single Member LLC?"
5. You must check YES.
6. Note: Checking this box is the "master switch." It triggers the generation of Form 568 and the $800 annual tax voucher (Form 3522).
7. FTB website. You can log in a few weeks after filing to verify that the 568 has been posted to your business entity ID.

Since you have not been filing and paying the fee, the penalties and interest can add up. There is a one-time penalty abatement allowed. You want to use it on the oldest 568 not filed, the 2023 to lower your overall amount due the most. 

For 2024 and 2025, you can try to argue Reasonable Cause.

• The Argument: State clearly that you used professional tax software (TurboTax), received an "Accepted" status for your California filing, and reasonably believed that the 568 was included in that electronic transmission.
• Evidence: Attach a copy of your "Accepted" email from those years to prove you weren't ignoring your taxes, but were misled by the software interface.

If you can't pay everything at once, pay the $800 base tax for each year first. Interest and penalties are calculated based on the unpaid tax balance. Paying the $800 "stops the clock" on the most expensive part of the penalty calculation. Use Web Pay: Go to the FTB Web Pay site and select "LLC Tax (Form 3522)" to ensure the money is credited correctly to your LLC entity, not your personal SSN.

You can use the TurboTax software to create the forms for each year. Select that you want to add a state to get back into the software. Of course, you are not adding a state, just getting in to get the 568 for you to file. You could choose the amend method. Either way, save a copy of your return before doing anything.

Here are the FTB forms:

FTB Form 568 (2023)

FTB Form 568 (2024)

FTB Form 568 (2025)

[TI1973]

I have been paying the $800 annual tax online every year.

When I checked the PDF copies I had downloaded for my records (for each years), I noticed that Form 568 had been generated and included instructions stating that it needed to be filed by mail. I was completely unaware of this mailing requirement until I saw those documents.

Specifically, in 2022, TurboTax displayed a "Print and Mail" instruction during the e-filing process, so I was able to mail it correctly. In the subsequent years, that instruction never appeared, so I assumed the form had been successfully e-filed and took no further action. Was this due to TurboTax failing to provide the correct prompts, or did I somehow miss an instruction that was displayed?

You previously mentioned: "The following years, you were not required to mail the form." Since I answered "YES" to the question "Is [Business Name] owned by a Single Member LLC?", Form 568 was indeed generated. Despite this, why was my Form 568 not e-filed?

I want to ensure that my next filing is a successful e-file.

[AmyC]

1. I doubt you missed an instruction. There is a higher chance the software defaulted to Paper File for the 568 while E-filing your personal 540.

Common reasons TurboTax blocks e-filing for Form 568:

• Depreciation (Form 3885L): If your business has any assets being depreciated (computers, equipment, etc.), It will generate the form but force a "Print and Mail" status.
• Multiple Schedule Cs: If you have more than one business, TurboTax typically cannot bundle multiple 568s into one personal e-file transmission.
• "Stand-alone" Status: TurboTax Online often treats Form 568 as a separate entity return that is not physically attached to the personal 1040/540 e-file "envelope." If the software doesn't explicitly show "Form 568" as a line item on your final e-file transmit screen, it stays sitting in your account as a PDF waiting to be printed.

2. Not filed reasons:

• Paper file was the only choice
• Form 568 was not marked to be e-filed. You would select Federal, CA, and Form 568 to e-file.
• Look  at Form 568  Line M(1) or a checkbox at the bottom. If there is a checkmark indicating "Not eligible for e-file," the software will not send it.

Unfortunately, you will still need to print and mail the Form 568 for the years not e-filed. Include a brief cover letter for each year stating: "Form 568 for [Year] is being filed late due to a software e-file transmission error. The $800 annual tax was paid timely via Web Pay on [Date]."

File each year separately. Mail to: Franchise Tax Board, PO Box 942857, Sacramento, CA 94257-0500

Remember, for 2023 use the one time penalty abatement, form FTB 2918. For 2024 and 2025 use reasonable cause, argue that you exercised "ordinary business care and prudence" but were misled by your tax software's confirmation status.

Here is an example:

Subject: Request for Penalty Abatement – Reasonable Cause (Form 568)

To the Franchise Tax Board,

I am submitting the enclosed Form 568 for the [2024/2025] tax year. I respectfully request an abatement of any late-filing penalties based on Reasonable Cause.

Despite exercising ordinary business care and prudence, I was misled by my tax preparation software (TurboTax). I timely e-filed my California Personal Income Tax Return (Form 540) and received an "Accepted" confirmation. Based on the software's interface and the lack of "Print and Mail" instructions (which I had received and followed in 2022), I reasonably believed Form 568 was included in that electronic transmission.

Please note that the $800 Annual LLC Tax was paid timely via Web Pay on [Date of Payment]. This demonstrates my ongoing intent to remain compliant with California tax law.

Sincerely,

 [Your Name & LLC ID Number]

Reference: One-Time Penalty Abatement | FTB.ca.gov

[TI1973]

My tax filing included Form 3885A, not 3885L. I understand that the e-filing failed because I am claiming depreciation.
On a side note, is it okay to have only Form 3885A without 3885L?

[TI1973]

I have another question. When I download the completed 2025 PDF, Form 568 has a watermark that says "DO NOT MAIL  E-FILE ONLY."

While this makes it look as though the form has been e-filed, it turns out it actually wasn't. Why does a document that requires mailing carry such a misleading watermark?

[AmyC]

The 3885A is for personal business expenses so you need the 3885-L for your LLC business. 

The do not file watermark should disappear when you mark that you are printing to file rather than your copy.

If you can't get rid of the watermark, download the Forms and copy the information over. 

If you are on the desktop version, just switch to Forms mode and print.

FTB forms:

FTB Form 568 (2023)

FTB Form 568 (2024)

FTB Form 568 (2025)

[TI1973]

Thank you for all the answers.

I understand that the watermark disappears once printed.

TurboTax generated Form 3885A only, and not Form 3885L. I did not manually choose this. Since I am a Single Member LLC (SMLLC), could that be the reason why 3885L was not created? My Federal and CA personal returns have already been e-filed through TurboTax without 3885L.  Is this a problem?

Regarding the mail-filing of Form 568:
Where in the TurboTax e-filing process is the user notified that these documents need to be mailed? At what stage are the clear instructions displayed? I want to make sure I don't miss this next year, so please let me know.

[MonikaK1]

Form 568 can't be submitted with your 540 via e-file in certain situations. The situations in which it must be printed and mailed are shown on the form in TurboTax. If you are using a Desktop version of TurboTax, In Forms Mode, open the form and scroll to the very bottom. Depreciation on 3885L is one of the situations listed.

TurboTax generally does not support electronic filing (e-file) for California Form 3885L (Depreciation and Amortization for LLCs) within its TurboTax Home & Business software. While it may compute the depreciation, the software frequently flags this form as unsupported for e-filing, often requiring users to paper-file the Form 568 California LLC return.

If you are unable to e-file CA Form 568, apply for the waiver and mail in a hard copy. Form 3885L does not need to be included in that filing.  See also this discussion.

@TI1973