Yesterday’s post concerned the circumstances that will cause the California Franchise Tax Board to suspend a corporation’s rights, powers, and privileges to conduct business in California. Suspension, however, is reversible, although it isn’t necessarily easy. First, is the matter of delinquent returns. The Franchise Tax Board requires that all delinquent tax returns be filed. Second, all delinquent tax balances, including penalties, fees, and interest must be paid. Third, the corporation must be in good standing with the California Secretary of State. Finally, an Application for Certificate of Revivor must be filed. The application itself is probably the easiest item to complete. It may be submitted by “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”. Cal. Rev. & Tax. Code § 23305.
Often people are in a hurry to obtain a revival because they are in escrow or in litigation and suddenly someone is making an issue of the corporation’s status. The good news is that the Franchise Tax Board does permit “walk through” revivals. However, the corporation must be in escrow or litigation or have pending loans or a pending federal grant.
When reviving a corporation from Franchise Tax Board, it is advisable to consider seeking relief from the voidability of contracts pursuant to Section 23305.1 of the Revenue & Taxation Code. That, however, is a topic for another post.
