The California Franchise Tax Board can suspend a corporation’s rights, powers, and privileges to conduct business in California for delinquent returns, failure to pay taxes and a variety of other reasons. Suspension, however, is generally reversible, although it can be an expensive, difficult task.

In order to revive a suspended corporation, the Franchise Tax Board requires all delinquent tax returns to be filed and all delinquent tax balances, including penalties, fees, and interest to be paid. The corporation must also be in good standing with the California
Secretary of State. Good standing requires the timely filing of the Statement of Information with the California Secretary of State along with the applicable fees.

Once all returns are filed, tax balances have been paid and the corporation is in good standing, the corporation must then file an Application for Certificate of Revivor. The Application can be submitted “by any stockholder or creditor, by a majority of the surviving trustees or directors thereof, by an officer, or by any other person who has interest in the relief from suspension or forfeiture.”

Revivals often occur when the corporation is in escrow or involved in litigation in which corporate status becomes an issue. In such cases the Franchise Tax Board permits “walk through” revivals. However, absent an escrow, litigation, have pending loans or a pending
federal grant, the process will not be fasttracked and can often take months.

If a corporation is revived, it is recommended that the corporation consider pursuing relief from the voidability of contracts permitted by Section 23305.1 of the Revenue & Taxation Code so that interim contracts will not be rendered void by the prior suspension or forfeiture. We suggest that you involve your attorney as soon as possible if it becomes necessary to revive a suspended corporation or, alternatively if you have claims against a suspended corporation.

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.