In 2019, a new law took effect in California, which permits a California corporation to be administratively dissolved if the corporation’s corporate powers have been suspended by the Franchise Tax Board (“FTB”) for 60 consecutive months.
Before dissolving the corporation administratively, the FTB must notify the corporation of the pending administrative dissolution by mailing to the last known address of the corporation an Administrative Dissolution/Cancelation – Intent Notice letter. For the first time, the FTB has started mailing these Intent Notice letters. According to the FTB, it recently sent Intent Notice letters to nearly 500 California corporations.
Many of these corporations have long since been out of business and abandoned by the owners, and such notices will be received with a shrug of the shoulders. But if the corporation has valuable contract rights or intellectual property rights (patent, trademark, or copyright) or if the corporation owns real property, it will want to avoid administrative dissolution. It can do so by objecting in writing within the 60-day period starting with the notice date on the Intent Notice letter and following the specified procedure for objecting. Failing a timely objection, the corporation will be administratively dissolved.
If a corporation timely objects to the administrative dissolution, it will have 90 days to (1) file past-due tax returns, (2) pay all accrued taxes, penalties, and interest, (3) file a current Statement of Information with the Secretary of State, (4) fulfill any other requirements to be eligible, and (5) apply for a certificate of revivor.
If all the foregoing conditions are satisfied, the administrative dissolution will be canceled, but if not, the corporation will be administratively dissolved. Once the administrative dissolution takes place, that’s it for the corporation. There are no appeal rights.
The FTB may extend the 90-day period one time.