
Ask HN: Help I owe over 100k in taxes after signing up for Stripe Atlas - browsercoin
I signed up for Stripe Atlast in 2017, and pretty much just forgot about it.<p>In Canada, if your company don&#x27;t make any money, you don&#x27;t file anything, and the company dissolves.<p>So imagine my surprise at the Rocket Lawyer letter stating I owe 100k+ USD in taxes for a corporate registry that has not turned any revenue to speak of or expenses.<p>am I going to get extradited over this shit? God damn, I really wish they would&#x27;ve been clear that if you register through Stripe Atlas, you will somehow owe 100k+ in taxes. I thought taxes can only be collected if your company made the money, how can they expect me to pay this?<p>I&#x27;m absolutely freaking out right now. There&#x27;s no way I can pay this. It&#x27;s fucking ridiculous that I have to pay taxes just for registering a delware company.<p>edit: MODS, why did this get flagged? I&#x27;m trying to find fucking answers, this is not helping me.
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patio11
I work on Stripe Atlas. We've gotten in touch with `browsercoin privately, but
I wanted to provide some context for other founders here, since many people
get this letter every year. I have to make the obligatory "I am not an
accountant and I am not your accountant" disclaimer.

The state of Delaware has something called franchise taxes, which there are
two ways to calculate.
[https://corp.delaware.gov/frtaxcalc/](https://corp.delaware.gov/frtaxcalc/)
Revenue is not a factor under either method; you can think of this more as a
renewal fee than an income tax.

If a company does not file their franchise taxes, Delaware will send them a
letter demanding taxes. To put a number on that letter, Delaware uses the
Authorized Shares Method. This returns a different number than the Assumed Par
Value Capital Method.

Since companies are allowed to pick whichever is in their interest when they
file their taxes, companies receiving that letter will often not pay the
number on it.

Stripe Atlas companies can calculate, file, and pay their Delaware franchise
tax through our tax tool. Overwhelmingly, they pay the minimum tax when filing
on time: $400. There is a minor additional charge for late filed taxes.

Since we are aware that the state of Delaware sends letters on this matter
which are confusing to many founders if those founders fail to file their
taxes, we aggressively get in touch with Atlas founders around tax time.

~~~
genbit
I can confirm, Stripe is very proactive in getting in touch around tax time.
But I guess many people just forget and pay late fees or get letters such as
above.

One question which is not clear for me - is it possible to dissolve a company
through Stripe Atlas?

~~~
browsercoin
How do you define proactive? I didn't get any notifications. I would've
appreciated an SMS or even a courtesy call. As somebody who has to manage
dozens of email accounts, it's possible that I missed it.

Stripe Atlas does not help you dissolve a company, it's an extra few hundred
dollars in fees and more if you hire ppl.

In total, my mistake is going to cost me around 1000 USD, vs 100k. It was
wrong for me to assume that Stripe Atlas would explain these potential
pitfalls, all of which were not made clear when I signed up.

I think just for future cases, it would be great to explain these hidden costs
like on this site:

[https://flagtheory.com/stripe-atlas/](https://flagtheory.com/stripe-atlas/)

Had I been made aware of that site, I wouldn't have done it. The cost and
legal exposure to the Land of Lawsuits was a stupid decision.

If you are not American, don't use Stripe Atlas like flagtheory writes on his
website....if Patrick didn't promote it I wouldn't have joined Atlas in the
first place so obviously he's doing a good job, but really wish that the
hidden costs and risks are made clearer to non-Americans.

that is all. I don't hold a grudge against patrick or stripe, in the end, I
did not do my own due diligence, and just blindly trusted what was advertised.
it's my fault that I'm in this situation and I apologize if I have used strong
languages, waking up to fact that you owe 100k in taxes, in an unfamiliar
land, can cause panic.

~~~
jasonkester
You seem to be moving the goalposts in an attempt to remain outraged.

Surely you knew that there was a ~$500/year fee to have a US corporation when
you created yours. There are no remaining "pitfalls" or "hidden costs" or
"stupid decisions" or "risks" to your situation.

And you knew that when you wrote this comment. Your scary situation went away
completely. One would expect you to be relieved. Why are you still behaving
like this?

------
tuberry
Same thing happened to me last year and I had exactly the same reaction :)
It’s just the default information the franchise tax board uses to estimate
your taxes. When you file to pay your minimum $500 you can update the
information to show $0 revenue, and 0 shares issued in the 12 month period
which should bring the amount down to the minimum $500. If you have any
problems you can call the Delaware tax board and they can walk you through it
(that’s what I did).

~~~
dudebrah
or read this: [https://www.cooleygo.com/so-you-owe-thousands-in-delaware-
fr...](https://www.cooleygo.com/so-you-owe-thousands-in-delaware-franchise-
tax/)

------
riteshpatel
Relax :)

This is what you need to know: [https://www.cooleygo.com/so-you-owe-thousands-
in-delaware-fr...](https://www.cooleygo.com/so-you-owe-thousands-in-delaware-
franchise-tax/)

You should owe $400 ish based on issued shares and assets.

~~~
browsercoin
thanks, how do i input these changes myself? went on the delaware tax site but
the amount is still $80,000. How can I just pay $400 on that website?

~~~
tomhoward
Here's the page that lets you do it:

[https://icis.corp.delaware.gov/ecorp/logintax.aspx?FilingTyp...](https://icis.corp.delaware.gov/ecorp/logintax.aspx?FilingType=FranchiseTax)

You have to enter the value of your net income and assets, and after you've
done that it will update to the ~$400 amount.

------
hackersword
[https://flagtheory.com/stripe-atlas/](https://flagtheory.com/stripe-atlas/)

>Besides the high rate of corporate taxation (one of the highest of all
developed economies), the IRS tax code has huge penalties for noncompliance.
For instance, if you intentionally disregard filing a bank reporting form (the
FBAR), you’ll face serious penalties, including jail time, a $50,000 fine

Were you required to file a bank reporting form and didn't over 2 years? (ie
$100k ) ??

~~~
browsercoin
holy shit....this was not explained to me at all.

~~~
hackersword
[https://corp.delaware.gov/paytaxes/](https://corp.delaware.gov/paytaxes/)

------
EgoIncarnate
No way you should owe $100k. Sounds like a scam.

I don't think there is a minimum cost for federal, but Delaware does
accumulate fees if you don't dissolve the corporation:

There is a minimum tax of $175 and a minimum filing fee of $50; so there is a
minimum Delaware franchise tax and annual report payment total of $225 a year
for Delaware domestic corporations. Domestic corporations must file by March 1
or face a $200 penalty, and a 1.5% interest rate on the amount due. Source:
[https://www.delawareregisteredagent.com/how-to/file-
delaware...](https://www.delawareregisteredagent.com/how-to/file-delaware-
corporate-franchise-taxes)

------
jrockway
Unpopular opinion but I think you should find the services of a lawyer who
understands this area of law. If you are concerned about paying $100,000 and
being forcibly removed from your country of residence to stand trial in
another country... now is the time to get a lawyer, not later.

------
edwinwee
(I work at Stripe.) Hrm, that doesn't sound right...could you email me and we
can take a look? edwin@stripe.com

------
foxfired
I was about to make a comment on a stackoverflow question but then I held my
self back. The user tried to do something in php, and an error occurred. The
sensible thing to do would be to read the error (which states the syntax error
by the way). Instead, that person posted the question on SO, using similar
language then OP.

Now the sensible thing for you to do would be to contact stripes. Nothing
else.

------
throwawayNov6
It could be helpful to understand that there are multiple governmental
entities that could tax the income of a Delaware corporation: (1) Federal
Corporation Income taxes -- through the IRS; and (2) State Corporate
Income/Franchise Taxes -- through the relevant State agency. (There may be
other local taxes such as business license and sales taxes, but that is not
relevant here to your franchise tax issue).

You are required to file separate tax returns each year to each entity (so you
pay both federal and state taxes). (If you are from Canada, "states" are
roughly equivalent to "provinces".)

Since you mentioned "franchise taxes", it looks like you are looking at the
State of Delaware's taxes (and not the IRS).

In Delaware, franchise taxes can generally be calculated using two different
methods: (1) Authorized Shares Method (number of shares you authorized); and
(2) Assumed Par Value Capital Method (generally based on the value of the
assets in your company). See
[https://corp.delaware.gov/frtaxcalc/](https://corp.delaware.gov/frtaxcalc/).

Most startups have been told to authorize 10 million shares in their
incorporation paperwork. In Delaware, if you select the calculation method
based on the number of shares, and you authorized 10 million shares, you could
be surprised by a very expensive "initial" franchise tax calculation.

Others have already linked to a good article discussing this "surprise" bill:
[https://www.cooleygo.com/so-you-owe-thousands-in-delaware-
fr...](https://www.cooleygo.com/so-you-owe-thousands-in-delaware-franchise-
tax/).

The solution is to look closely at your franchise tax bill and read about the
option to calculate your taxes using the Assumed Par Value method.

If you cannot afford a lawyer, contact the State of Delaware Division of
Corporations directly to discuss how to use the Assumed Par Value method to
calculate your franchise taxes. See
[https://corp.delaware.gov/contact/](https://corp.delaware.gov/contact/) (the
Franchise Tax contact number is (302) 739-3073 option 3).

Good luck.

------
pyreal
I don't understand how you could owe taxes on a company that didn't have
revenue. Can you explain how you came to owe 100k? Is it some sort of penalty
for not remitting forms?

~~~
browsercoin
its says Franchise Tax Return.

I don't understand why I owe taxes on a company with zero revenue, zero
expenditure. I literally just registered with Stripe Atlas thinking it would
be cool to own a US corp for future fund raising.

Big fucking mistake.

~~~
baconomatic
Have you reached out to Stripe about this?

~~~
browsercoin
yes I did. still no response so I hope making it to the frontpage on HN will
invoke some explanation.

How in the fuck is it remotely fair to tax corporations with no employees, no
revenue, no investments, no capital, nada, zil, zip!

~~~
dragonwriter
> How in the fuck is it remotely fair to tax corporations with no employees,
> no revenue, no investments, no capital, nada, zil, zip!

Having a corporation is a privilege, and many US jurisdictions apply a minimum
fee or tax to it (usually, a fee hundred USD annually.)

That's not what you are dealing with, though, which seems likely to be a non-
compliance penalty from a state or local taxing authority; you generally _do_
need to file tax paperwork annually, probably both federal and state, for a
US-based corporation.

Not sure how Stripe Atlas works, by the actual taxing authority should have
sent a very specific documentation of the charges; they should be able to
provide you with that documentation if they are set up to accept that on
behalf of the corp.

------
jvreagan
Lots of good advice here, but why aren't you talking to a tax attorney or
other legal advisor?

------
dudebrah
just going to leave this here: [https://www.cooleygo.com/so-you-owe-thousands-
in-delaware-fr...](https://www.cooleygo.com/so-you-owe-thousands-in-delaware-
franchise-tax/)

------
bsvalley
"A franchise tax is not based on income. Rather, the typical franchise tax
calculation is based on the net worth of or capital held by the entity".

Did you transfer large amount of money to your business?

~~~
browsercoin
no. I just signed up on Stripe Atlas, and that was it.

I definitely won't be doing this again as a non-American.

Really wish they would've been more explicit about the true costs of
establishing a business in USA

------
diek00
seems like you should have done some homework, [https://flagtheory.com/stripe-
atlas/](https://flagtheory.com/stripe-atlas/)

~~~
browsercoin
that site did not exist or I was made aware of when I joined atlas as soon as
Patrick M started advertising.

well to anyone who is thinking of using Stripe Atlas and is not American:

    
    
        DO NOT FUCKING DO IT.

~~~
akerl_
Do you think the penalty here is specific to you not being American? Why would
an American who failed to file taxes for their business not have ended up in
the same spot as you?

------
nolite
It could be related to the number of shares you allocated to your corporation
when you incorporated. I can't speak more about it, as I'm no expert... but
I've heard similar horror stories of Delaware companies... where its critical
to pay attention to the number of shares, else you might find yourself
screwed.

So like everyone else said.... get a lawyer.

... or fake your death..

~~~
jacobush
... with a lawyer.

------
moioci
Does it strike anyone else as weird that the Delaware taxation authority would
send a dunning letter via Rocket Lawyer?

------
tango24
Sounds like a mistake? Maybe they sent a letter to the wrong customer?

------
xfitm3
Was this note sent to you through your registered agent?

------
loco5niner
Language

------
milin
Relax Max

------
mdekkers
Better call Saul

------
anoncoward111
USA is architected to screw you over for trying to get something started
legally ;)

The good news is you will be fine. It's just clerical. You won't be extradited
and they won't drain your account.

In addition to the other advise, look up free legal hotlines. They're really
friendly and can sometimes give you information that isn't easily googleable.

Good luck. The national sport in America is ignoring bills.

------
browsercoin
so it seems that I need to hire my own accountant and lawyers according to
stripe.....what the fuck is the point of Atlas if you are not American?

waht if I don't pay? are they gonna come after me?

edit: just went to the delaware website, it says to wire them 80,000 USD or
else. sent them an email to get clarification.

~~~
tomhoward
You won't have to wire them $80K. Believe me, I've been running Delaware
companies from outside the U.S. for 10 years and it's always fine, even if you
file late.

If you don't pay, the company eventually becomes void and you can no longer
trade.

They don't come after you for unpaid franchise taxes on a void company - even
for the $400.

~~~
browsercoin
whew! thanks. yeah yesterday i was in just full out panic mode. i may have
behaved aggressively in trying to get attention on this issue.

