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Ask HN: Help I owe over 100k in taxes after signing up for Stripe Atlas
138 points by browsercoin on Nov 6, 2018 | hide | past | web | favorite | 58 comments
I signed up for Stripe Atlast in 2017, and pretty much just forgot about it.

In Canada, if your company don't make any money, you don't file anything, and the company dissolves.

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.

am I going to get extradited over this shit? God damn, I really wish they would'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?

I'm absolutely freaking out right now. There's no way I can pay this. It's fucking ridiculous that I have to pay taxes just for registering a delware company.

edit: MODS, why did this get flagged? I'm trying to find fucking answers, this is not helping me.

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/ 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.

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?

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:


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.

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?

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).

Relax :)

This is what you need to know: https://www.cooleygo.com/so-you-owe-thousands-in-delaware-fr...

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

Yep. This has little to do with Stripe Atlas. This is the default letter sent if you do not file your taxes. This is something Stripe can address by building a better UX around it though. Maybe a notification system.

Part of the reason why I blindly signed up for Stripe was because of the great experience I had with their other products.

https://flagtheory.com/stripe-atlas/ didn't exist when I signed up.

As several people have pointed out, you don't owe $100k in taxes. Maybe next time something like this happens, take a deep breath and read up on the relevant information before jumping to blame everyone involved for "fucking your American Dream".

You registered a business without paying attention to the necessary administrative steps like filing taxes, and since you didn't send Uncle Sam any information, he took a wild guess at what you owe.

One of the factor is Stripe Atlas for failing to explaining these things, anybody who is not on HN, is going to go through what I have in the past 10 minutes, which is full blown panic. Not my definition of a "great user experience".

sorry if I seemed angry, but censoring my threads will do that. It's hard to blame this on due dilligence, in this case I was sold on the expectation that they would take care of the paperwork for me, and be proactive in their communication about important dates like this.

I flagged your thread because it's not a productive topic for HN, it's you overreacting because you created a legal entity without doing your due diligence and then trying to get Stripe to reply to you faster by shaming them publicly.

As fun as it is to blame Stripe for bad UX, at the end of the day Stripe helped you make an agreement with the US Government: if you didn't read that agreement, that's on you.

And as general feedback: very few financial situations are improved by full blown panic. The government's penalties tend not to have per-minute granularity, so in almost every case it's worth taking a step back and gathering facts w/o the panic.

Still, this is a valuable thread for HN in some sense. I'm sure there are at least a handful of other people who would have made a similar mistake, and will be a little more cognizant of these issues after reading this. Hell, I might even be one of them, as I've been chewing on re-incorporating our business as a Delaware C-Corp. I think I would have read all the "fine print" so to speak anyway, but now you can bet I'll be even a touch more cautious and careful than before.

It may not be a thread that's useful to everyone, but it's not outright off-topic or useless when you consider how many startup founders or prospective founders visit HN.

also my behavior yesterday didn't really help much, but this is what full blown panic can do to people, I shudder the thought of someone who never saw this thread, go through the same shit.

im glad that there are people who find this thread helpful, please excuse my pissing on the American dream, saw Democrats won the house so my faith in America has been restored.

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?

Here's the page that lets you do it:


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.

Call Delaware Division of Corporations at (302) 739-3073 they can help you find your company with the name and tell you the exact amount you owe.


>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 ) ??

I don't think this happens unless the bank account has enough of a balance.

From irs.gov:

  United States persons are required to file an FBAR if:
  1. the United States person had a financial interest in
  or signature authority over at least one financial account
  located outside of the United States; and
  2. the aggregate value of all foreign financial accounts
  exceeded $10,000 at any time during the calendar year
  reported. [1]
You need to get an accountant. I work with a lot of accountants and have dealt with the IRS before, they are not some faceless org and will work with you. Ultimately, I think it's incredibly unlikely you owe 100k in back taxes on something with no revenue, but a good Accountant will understand the case law, tax code, and standard IRS procedures to help you through this.

[1] https://www.irs.gov/businesses/small-businesses-self-employe...

EDIT: Updated information to most recent rather than 2014

there was zero capital. nowhere near 10k

If he signed up in 2017 then he only missed one year of filings.

Not sure if this is relevant


>Foreign Corporations must file an Annual Report with the Delaware Secretary of State on or before June 30 each year.

(ie if he opened acct in Apr 2017, he'd have missed 2 filings by now)

Oh, I see, that's good to know. I was thinking of tax-year filing.

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

This is what tax attorneys are for. I know they're a lot more expensive than "nothing" but a good one is worth their weight in gold. Especially when it comes to crossing jurisdictions (US states or countries).

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...

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.

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

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.

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/.

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....

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/ (the Franchise Tax contact number is (302) 739-3073 option 3).

Good luck.

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?

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.

With all due respect, I don't understand why anyone would start a corporation in a foreign country, forget about it for two years, and then act surprised when they get a bill.

When you incorporate, you are (quite literally) making a person. That is an incredible responsibility and frankly, I'm not sympathetic to anyone who takes such a drastic step without bothering to do any homework.

In terms of advice, you've missed two filing deadlines, so this is a lawyer situation. I'd ask about retroactively killing off that company as it had no assets, revenue or stream of business as of the last filing date.

And next time, seriously, it doesn't matter if someone else does the paperwork for you. You are still creating a person in a foreign country!!

Not a lawyer advice below.

OK so you should not worry about this. Delaware uses Authorized Share Method to calculate franchise tax. With 10 million shares this ends up being a hefty sum. Instead, you could pay using Assumed Par Value Method and your tax will go down to something like $250/year including penalty.

You can select preferred method while paying this tax online. See https://www.cooleygo.com/so-you-owe-thousands-in-delaware-fr... for example.

Have you reached out to Stripe about this?

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!

> 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.

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

"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?

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

seems like you should have done some homework, https://flagtheory.com/stripe-atlas/

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 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?

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

"Well to anyone who is thinking of creating a business entity in the US which is taxed under US laws without doing the proper research regarding US taxes..."

I fixed that for you.

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..

... with a lawyer.

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

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

Was this note sent to you through your registered agent?


Relax Max

Better call Saul

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.

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.

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.

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.

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