If you conduct a search for a specific business on the California Secretary of State’s website, you may discover a business labeled as “FTB Suspended.” If a business has been tagged with this label, it means the California Franchise Tax Board (FTB) has decided to suspend the business.
If your business winds up getting suspended by the FTB, the ramifications can be severe. For example, when your business is suspended, you are unable to legally conduct business within the State of California. In addition, you cannot file taxes with an automatic extension or file a claim for a tax refund. You are also prohibited from selling any real property or transferring any real property. You also cannot legally close or dissolve your business or even file a legal action or defend your business in a court of law.
If all of these penalties and restrictions were not harsh enough, an FTB suspension also means your business may be subject to a $2,000 penalty per tax year for failing to file missing tax returns within 60 days after receiving a written demand to do so.
The Cause of Suspension
Businesses are required to comply with certain requirements in order to maintain good standing with the State of California. In California, a business entity registered with the California Secretary of State (SOS) must file and pay at least an $800 franchise or annual tax from its registration date to the current date, regardless of business activity, or it will be subject to suspension by the FTB.
The SOS may also suspend a business for not filing the required Statement of Information. It is possible for a business to be suspended by the SOS and the FTB at the same time.
A business suspended by the FTB can be “revived” by taking the following steps. First, you need to file an Application for Revivor. If the business is a corporation, you need to file FTB Form 3557 BC. If your business is an LLC, you need to file FTB Form 3557 LLC. When you file Form FTB 3557, you also need to make sure and file all delinquent tax returns and pay all delinquent taxes, including any penalties and interest.
Once your business is deemed to be compliant and gets the proverbial seal of approval by the FTB, you can file a Certificate of Revivor. When the FTB issues a Certificate of Revivor and the business is “reinstated,” the FTB will inform the Secretary of State. At that point, the Secretary of State will update its website and change the status of the business to “active” corporate status.
Need Help Reviving Your Business by the FTB? Speak to an Experienced Business Attorney in Los Angeles Today
If your business was suspended by the FTB, it is extremely important to retain the counsel of an experienced and reputable business attorney in Los Angeles. Hakim Law Group represents an array of entrepreneurs, operating companies, venture capital firms, and financiers in the education, fashion, finance, health care, internet and social media, technology, real estate, and television industries. Whatever business issue you need addressed, including reviving businesses after suspension by the FTB, the professionals at Hakim Law Group are here to help. For further information or to schedule an appointment please contact HLG at 310.993.2203 or visit www.HakimLawGroup.com to learn more.