The California Franchise Tax Board can suspend a corporation if it fails to pay taxes, penalties, fees or interest or fails to file a return. Such suspension can also befall a foreign entity qualified to do business in the State of California.
The consequences of suspension include the following prohibitions upon the business of the corporation. It may not:
- Legally transact business
- Bring an action or defend itself in court
- Receive an automatic extension of time to file
- File a claim for refund
- File or maintain an appeal before the Board of Equalization
- Begin or continue a protest
- Legally close or dissolve the business
Also note that a suspended corporation may lose its right to revive under its own name if another corporation appropriates its name during the period of suspension.
If your entity has been suspended by the Franchise Tax Board immediately contact legal counsel so that the entity can be revived and continue to legally transact business in California, protect its intellectual property rights and retain access to the Courts to prosecute and defend actions. Failure to revive the entity can result in personal liability for owners, directors, officers, shareholders and members.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
A nonprofit that I know of was suspended in Jan 2, 2018. They haven’t told their donators. At the end of the year they will send out donation acknowledgments because they say the IRS does not know and they are in good standing with the IRS. Is this legal for them to send out 2018 donation acknowledgements? We are in serious need of consultation.