Weird situation with a trademark

[huddy61]

A trademark doesn’t turn your business into an LLC or S‑corp, you stay a sole proprietor unless you officially register otherwise. That “Notice of Assessment” isn’t an income‑tax form; it’s just the trademark office reminding you they didn’t get the 2024 fee and telling you what’s owed. You pay that fee directly to them, not on your personal return. If your son isn’t using the mark and doesn’t plan to, just let the registration lapse or file to cancel it so no more fees pop up.

 

[quincy]

A trademark doesn’t turn your business into an LLC or S‑corp, you stay a sole proprietor unless you officially register otherwise. That “Notice of Assessment” isn’t an income‑tax form; it’s just the trademark office reminding you they didn’t get the 2024 fee and telling you what’s owed. You pay that fee directly to them, not on your personal return. If your son isn’t using the mark and doesn’t plan to, just let the registration lapse or file to cancel it so no more fees pop up.

The Notice was not from a “trademark office.” It was from the Secretary of State. The procedure for registering a trademark in Ohio is described in the link I provided earlier.

A trademark is a business identifier. A trademark cannot stand on its own. It needs to identify something.

 

[Taxing Matters]

Is having a trademark in Ohio the same as LLC or s-corp under individual ssn? He never registered anything else.
Is he supposed to file trademark taxes along with personal? Did he receive notice because nothing was filed for 2024?

He never ended up doing any business under trademark like he thought he would, minus some supplies for few hundred bucks. I'm assuming best advice is to cancel it and discontinue it?
Since he never made any money with this, can he claim exception?

Any help would be appreciated.
Thanks!

There is no tax imposed for simply holding the trademark, i.e. there is no "trademark tax", at least not at the federal level. Naturally if the business had a profit then income tax may be owed, along with FICA taxes. FICA taxes are what fund the Social Security, Medicare, and Medicaid programs.

Business expenses incurred before the business is up and running are,in the language of federal tax, start up costs. Most start up costs cannot be fully deducted in the year the cost was incurred. Start-up costs up to $5,000 may be deducted but the rest are amortized over a period of 15 years. Your son may find IRS publication 583 helpful in determining what he can and can't deduct during the start up period.

That “Notice of Assessment” isn’t an income‑tax form; it’s just the trademark office reminding you they didn’t get the 2024 fee and telling you what’s owed. You pay that fee directly to them, not on your personal return. If your son isn’t using the mark and doesn’t plan to, just let the registration lapse or file to cancel it so no more fees pop up.

While the U.S. Patent and Trademark Office (USPTO) apparently does issue what it calls notices of assessment so do many tax agencies. The word assessment has a different meaning in trademark law than it does in tax law. I'd have to read the notice to know what is going on and what your son may need to do if it turns out it's tax assessment. Note that even after the start up period a business generally may not deduct costs for trademark related expenses. Instead those are also amortized.

 

[quincy]

There is no tax imposed for simply holding the trademark, i.e. there is no "trademark tax", at least not at the federal level. Naturally if the business had a profit then income tax may be owed, along with FICA taxes. FICA taxes are what fund the Social Security, Medicare, and Medicaid programs.

Business expenses incurred before the business is up and running are,in the language of federal tax, start up costs. Most start up costs cannot be fully deducted in the year the cost was incurred. Start-up costs up to $5,000 may be deducted but the rest are amortized over a period of 15 years. Your son may find IRS publication 583 helpful in determining what he can and can't deduct during the start up period.


While the U.S. Patent and Trademark Office (USPTO) apparently does issue what it calls notices of assessment so do many tax agencies. The word assessment has a different meaning in trademark law than it does in tax law. I'd have to read the notice to know what is going on and what your son may need to do if it turns out it's tax assessment. Note that even after the start up period a business generally may not deduct costs for trademark related expenses. Instead those are also amortized.

To me, this sounds more like a state sales tax issue, as a failure by a business to report business activity comes with the penalties outlined in the Notice, A registered business (and registering a trademark is registering a business) must file whether there were any sales or not.

But a personal review by a professional in Ohio is, of course, the best way to find out what the Notice is all about.

Two links from the Secretary of State, one to dissolving/canceling a business entity and the other to a form for registering a trade name (or fictitious name):

https://www.ohiosos.gov/businesses/...ining-a-business/how-to-dissolve-a--business/

https://www.ohiosos.gov/globalassets/business/forms/524a.pdf

 

[Zigner]

It sounds to me like the secretary of state made an assumption that there is a business based on the trademark. As mentioned above, a personal review by a professional in the state may be necessary. There may be something in the state's codes about this.

 

[quincy]

It sounds to me like the secretary of state made an assumption that there is a business based on the trademark. As mentioned above, a personal review by a professional in the state may be necessary. There may be something in the state's codes about this.

I might add that it would be a logical assumption seeing as how registration of a trademark requires a business that the trademark identifies.

 

[LdiJ]

The bottom line is that someone needs to review the letter to determine exactly what it is about and exactly what needs to be done.

 

[quincy]

That sounds like a good bottom line.