Dear Tax Guru-

I originally opened up a single person LLC/corporation in September 2005 for some side work I was doing outside of my full time job. December 2008 I receive a letter from the New Jersey stating I had tax liabilities from 2006, the minimum corporate tax, which I was not aware existed. In 2006 I elected to have my corporation be treated as an S corp by the IRS, but I made no such election with New Jersey.

During that time period my wife had two children and our economic situation changed dramatically, so I would like to dissolve my s corporation as I have no time or use for it but I am still financially responsible for filings and corporate minimum tax, but am very afraid of the tax liabilities I would have to incur to receive a tax clearance certificate and how long the process takes.

My estimate is that now that I have paid the 2006 liabilities I still have the 2007 + 2008 liabilities with penalties and interests. However, I notice on the dissolution forms it mentions that a "New Jersey S Corp" has to pay 9% of income to NJ. If I had to pay 9% of my total personal income over the last 3 years it would completely bankrupt my family.

Has anyone gone through this in NJ or have any war stories to share? I would greatly appreciate anyone's insight into this.