The Corporation Franchise TaxSuspension and Revivor

Section § 23301

Explanation

In California, if a domestic or foreign taxpayer does not pay their due taxes, penalties, or interest within certain deadlines, their rights and privileges as a taxpayer might be suspended or forfeited. Specifically, taxes need to be paid by 6 p.m. on certain dates post the end of the taxable year or after a demand notice from the Franchise Tax Board. If these payments aren't made on time, it could lead to suspension of operations, except when filing for exempt status or updating incorporation documents.

Except for the purposes of filing an application for exempt status or amending the articles of incorporation or organization as necessary either to perfect that application or to set forth a new name, the powers, rights, and privileges of a domestic taxpayer may be suspended, and the exercise of the powers, rights, and privileges of a foreign taxpayer in this state may be forfeited, if any of the following conditions occur:
(a)CA Revenue & Taxation Code § 23301(a) If any tax, penalty, or interest, or any portion thereof, that is due and payable under Chapter 4 (commencing with Section 19001) of Part 10.2, or under this part, either at the time the return is required to be filed or on or before the 15th day of the 9th month following the close of the taxable year, is not paid on or before 6 p.m. on the last day of the 12th month after the close of the taxable year.
(b)CA Revenue & Taxation Code § 23301(b) If any tax, penalty, or interest, or any portion thereof, due and payable under Chapter 4 (commencing with Section 19001) of Part 10.2, or under this part, upon notice and demand from the Franchise Tax Board, is not paid on or before 6 p.m. on the last day of the 11th month following the due date of the tax.
(c)CA Revenue & Taxation Code § 23301(c) If any liability, or any portion thereof, which is due and payable under Article 7 (commencing with Section 19131) of Chapter 4 of Part 10.2, is not paid on or before 6 p.m. on the last day of the 11th month following the date that the tax liability is due and payable.
taxpayer suspension tax penalties Franchise Tax Board ...

Section § 23301.5

Explanation

If a business in California, either based in the state or from outside, doesn't file a required tax return, it can lose its ability to operate normally. This rule has an exception: the business can still file paperwork to change its status (like becoming tax-exempt) or amend its name.

Except for the purposes of filing an application for exempt status or amending the articles of incorporation or organization as necessary either to perfect that application or to set forth a new name, the powers, rights, and privileges of a domestic taxpayer may be suspended, and the exercise of the powers, rights, and privileges of a foreign taxpayer in this state may be forfeited, if a taxpayer fails to file a tax return required by this part.
suspended business operations domestic taxpayer foreign taxpayer ...

Section § 23301.6

Explanation

This law says certain rules apply to foreign businesses in California only if they are officially qualified or registered to do business here. Even if a business is supposed to register under other rules, it doesn’t count as registered for this law until they actually register with the Secretary of State.

Sections 23301, 23301.5, and 23775 shall apply to a foreign taxpayer only if the taxpayer is qualified or registered to do business in California. A taxpayer that is required under Section 2105 or 17708.02 of the Corporations Code to qualify or register to do business shall not be deemed to have qualified or registered to do business for purposes of this article unless the taxpayer has in fact qualified or registered with the Secretary of State.
foreign taxpayer qualification registration ...

Section § 23302

Explanation

This section outlines that if a taxpayer's powers, rights, and privileges are to be forfeited or suspended according to certain other sections, it will only happen after specific notice is given as required by law. The Franchise Tax Board will communicate the affected taxpayers to the Secretary of State, who then confirms the suspension or forfeiture.

Once this process is documented, the suspension becomes effective. A taxpayer with suspended or forfeited rights cannot sell or transfer real estate in California during this time.

(a)CA Revenue & Taxation Code § 23302(a) Forfeiture or suspension of a taxpayer’s powers, rights, and privileges pursuant to Section 23301, 23301.5, or 23775 shall occur and become effective only as expressly provided in this section in conjunction with Section 21020, which requires notice prior to the suspension of a taxpayer’s powers, rights, and privileges.
(b)CA Revenue & Taxation Code § 23302(b) The notice requirements of Section 21020 shall also apply to any forfeiture of a taxpayer’s powers, rights, and privileges pursuant to Section 23301, 23301.5, or 23775 and to any voidability pursuant to subdivision (d) of Section 23304.1.
(c)CA Revenue & Taxation Code § 23302(c) The Franchise Tax Board shall transmit the names of taxpayers to the Secretary of State as to which the suspension or forfeiture provisions of Section 23301, 23301.5, or 23775 are or become applicable, and the suspension or forfeiture therein provided for shall thereupon become effective. The certificate of the Secretary of State shall be prima facie evidence of the suspension or forfeiture.
(d)CA Revenue & Taxation Code § 23302(d) If a taxpayer’s powers, rights, and privileges are forfeited or suspended pursuant to Section 23301, 23301.5, or 23775, without limiting any other consequences of such forfeiture or suspension, the taxpayer shall not be entitled to sell, transfer, or exchange real property in California during the period of forfeiture or suspension.
taxpayer rights suspension taxpayer privileges forfeiture notice requirements ...

Section § 23303

Explanation

Even if a taxpayer's business is suspended or forfeited per Sections 23301 or 23301.5, they still need to pay taxes on any business done or income earned during that time.

Notwithstanding the provisions of Section 23301 or 23301.5, any taxpayer that transacts business or receives income within the period of its suspension or forfeiture shall be subject to tax under the provisions of this chapter.
business suspension forfeiture taxpayer obligations ...

Section § 23304.1

Explanation

If a business's rights are suspended or forfeited because of not paying taxes, any contracts they make can be canceled if the other party asks. This also applies if a foreign business operates without registering or obtaining a tax account with the state and fails to file a tax return. Contracts made during this period can be voided by the other party. The specific period when these rules apply starts from the later of certain dates related to when the issue started, and ends when the business gets the proper authorizations or account numbers.

If a business doesn't respond within 60 days to a tax demand from the state, any contracts made after that can also be voided unless they fix the issue. The names and details of these non-compliant businesses may be made public. For LLCs, a similar rule applies but beginning in 2014.

(a)CA Revenue & Taxation Code § 23304.1(a) Every contract made in this state by a taxpayer during the time that the taxpayer’s powers, rights, and privileges are suspended or forfeited pursuant to Section 23301, 23301.5, or 23775 shall, subject to Section 23304.5, be voidable at the request of any party to the contract other than the taxpayer.
(b)CA Revenue & Taxation Code § 23304.1(b) If a foreign taxpayer that neither is qualified to do business nor has an account number from the Franchise Tax Board, fails to file a tax return required under this part, any contract made in this state by that taxpayer during the applicable period specified in subdivision (c) shall, subject to Section 23304.5, be voidable at the request of any party to the contract other than the taxpayer.
(c)Copy CA Revenue & Taxation Code § 23304.1(c)
(1)Copy CA Revenue & Taxation Code § 23304.1(c)(1) For purposes of subdivision (b), the applicable period shall be the period beginning on January 1, 1991, or the first day of the taxable year for which the taxpayer has failed to file a return, whichever is later, and ending on the earlier of the date the taxpayer qualified to do business in this state or the date the taxpayer obtained an account number from the Franchise Tax Board.
(2)CA Revenue & Taxation Code § 23304.1(c)(2) With regard to a limited liability company, the applicable period shall be the period beginning on January 1, 2014, or the first day of the taxable year for which the taxpayer has failed to file a return, whichever is later, and ending on the earlier of the date the taxpayer qualified to do business in this state or on the date the taxpayer obtained an account number from the Franchise Tax Board.
(d)CA Revenue & Taxation Code § 23304.1(d) If a taxpayer fails to file a tax return required under this part, to pay any tax or other amount owing to the Franchise Tax Board under this part or to file any statement or return required under Section 23772 or 23774, within 60 days after the Franchise Tax Board mails a written demand therefor, any contract made in this state by the taxpayer during the period beginning at the end of the 60-day demand period and ending on the date relief is granted under Section 23305.1, or the date the taxpayer qualifies to do business in this state, whichever is earlier, shall be voidable at the request of any party to the contract other than the taxpayer. This subdivision shall apply only to a taxpayer if the taxpayer has an account number from the Franchise Tax Board, but has not qualified to do business under the Corporations Code. In the case of a taxpayer that has not complied with the 60-day demand, the taxpayer’s name, Franchise Tax Board account number, date of the demand, date of the first day after the end of the 60-day demand period, and the fact that the taxpayer did not within that period pay the tax or other amount or file the statement or return, as the case may be, shall be a matter of public record.
contract voidable suspended rights foreign taxpayer compliance ...

Section § 23304.5

Explanation

If one party has the right to declare a contract voidable under a certain section, they can only do so through a lawsuit in a proper court. The court's decision will only affect the contract if the party gets a fair chance to fix any problems. If the court finds the contract should be voided, it will cancel the contract. However, the court won't do this unless the party gets back all the benefits they provided through the contract.

A party that has the right to declare a contract to be voidable pursuant to Section 23304.1 may exercise that right only in a lawsuit brought by either party with respect to the contract in a court of competent jurisdiction and the rights of the parties to the contract shall not be affected by Section 23304. 1 except to the extent expressly provided by a final judgment of the court, which judgment shall not be issued unless the taxpayer is allowed a reasonable opportunity to cure the voidability under Section 23305.1. If the court finds that the contract is voidable under Section 23304.1, the court shall order the contract to be rescinded. However, in no event shall the court order rescission of a taxpayer’s contract unless the taxpayer receives full restitution of the benefits provided by the taxpayer under the contract.
voidable contract court jurisdiction rescission ...

Section § 23305

Explanation

If a business has been suspended or had its rights forfeited due to unpaid taxes, it can be reinstated by applying in writing to the Franchise Tax Board. The company must file any missing tax returns and pay all taxes, penalties, and interest owed. After this, the Board can issue a certificate of revivor to lift the suspension or forfeiture. Various parties like stockholders, creditors, or officers can submit this application on behalf of the business.

Any taxpayer which has suffered the suspension or forfeiture provided for in Section 23301 or 23301.5 may be relieved therefrom upon making application therefor in writing to the Franchise Tax Board and upon the filing of all tax returns required under this part, and the payment of the tax, additions to tax, penalties, interest, and any other amounts for nonpayment of which the suspension or forfeiture occurred, together with all other taxes, additions to tax, penalties, interest, and any other amounts due under this part, and upon the issuance by the Franchise Tax Board of a certificate of revivor. Application for the certificate on behalf of any taxpayer which has suffered suspension or forfeiture may be made 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.
business tax suspension certificate of revivor tax penalties ...

Section § 23305

Explanation

Before a business can be brought back to good standing with a certificate of revivor, the Franchise Tax Board must confirm with the Secretary of State that the business name complies with legal naming requirements. This applies whether the business is local or from out-of-state but doing business in California. If the business's name changes, foreign companies need to update their name declaration. Once the business is reinstated, it's like being put back on track without losing any legal rights from when it was suspended. Also, any contracts that were at risk of being canceled during the suspension might be fixable. Finally, this certificate serves as proof of the business's reinstatement and can be officially recorded in any county in California.

Before the certificate of revivor is issued by the Franchise Tax Board, it shall obtain from the Secretary of State an endorsement upon the application of the fact that the name of the taxpayer then meets the requirements of subdivision (b) of Section 201 or subdivision (b) of Section 17701.08 of the Corporations Code in the case of a domestic taxpayer or of subdivision (b) of Section 2106 or Section 17708.05 of the Corporations Code in the case of a foreign taxpayer that has qualified to do business. The reference to amendment of the articles of incorporation to set forth a new name contained in Sections 23301, 23301.5, and 23775 includes in the case of a foreign taxpayer the filing of an amended statement and designation to set forth its new name or to set forth an assumed name under subdivision (b) of Section 2106 or Section 17708.05 of the Corporations Code. Upon the issuance of the certificate by the Franchise Tax Board the taxpayer therein named shall become reinstated but the reinstatement shall be without prejudice to any action, defense, or right which has accrued by reason of the original suspension or forfeiture, except that contracts which were voidable pursuant to Section 23304.1, but which have not been rescinded pursuant to Section 23304.5, may have that voidability cured in accordance with Section 23305.1. The certificate of revivor shall be prima facie evidence of the reinstatement and the certificate may be recorded in the office of the county recorder of any county of this state.
certificate of revivor Franchise Tax Board Secretary of State endorsement ...

Section § 23305

Explanation

This law allows the Franchise Tax Board to temporarily restore a taxpayer's good standing without requiring full payment of taxes, penalties, and interest if they believe this could improve chances of collecting the full amount eventually. This restoration can have time limits or restrict what the taxpayer can do. However, if it turns out that this doesn't help in collecting the amount owed, the taxpayer's rights might be suspended or lost again.

Notwithstanding Section 23305, the Franchise Tax Board may revive a taxpayer to good standing without full payment of the taxes, penalties, and interest due if it determines that the revivor will improve the prospects for collection of the full amount due. This revivor may be limited as to time or may limit the functions the revived taxpayer can perform, or both. The taxpayer’s powers, rights, and privileges may again be suspended or forfeited if the Franchise Tax Board determines that the prospects for collection of the full amount due have not been improved by the revivor of the taxpayer.
Franchise Tax Board revivor good standing ...

Section § 23305

Explanation

This law is about the process of restoring a taxpayer's status if it was wrongly suspended by the Franchise Tax Board. When corrected, the taxpayer's name and details are made public to indicate their powers and privileges are restored. If a suspension error is identified, the taxpayer's status is retroactively fixed as if no mistake occurred. Additionally, any errors with notifications about compliance will also be corrected and publicly recorded.

(a)CA Revenue & Taxation Code § 23305(a) Upon issuance of the certificate of revivor, the Franchise Tax Board shall transmit to the Secretary of State the revived taxpayer’s name and its entity number.
(b)CA Revenue & Taxation Code § 23305(b) The taxpayer’s name and number, the fact that the taxpayer’s powers, rights, and privileges have been revived and the effective date of the revivor shall be a matter of public record.
(c)CA Revenue & Taxation Code § 23305(c) If the Franchise Tax Board determines that a suspension or forfeiture was in error by the Franchise Tax Board, the Franchise Tax Board shall, in connection with the revivor, indicate that the taxpayer is “restored.” The status of the restored taxpayer shall be retroactive to the date of suspension or forfeiture as if there had been no suspension or forfeiture.
(d)CA Revenue & Taxation Code § 23305(d) If the Franchise Tax Board determines that the mailing of the 60-day demand notice referred to in subdivision (d) of Section 23304.1 was in error or that the Franchise Tax Board’s original determination as to compliance with the 60-day demand notice was in error, the Franchise Tax Board’s revised conclusions also shall be part of the public record referred to in that subdivision.
certificate of revivor Franchise Tax Board revived taxpayer ...

Section § 23305

Explanation

This section means that a document from the Franchise Tax Board saying a business hasn't paid its taxes or filed a return serves as initial proof of those facts.

A certificate of suspension or forfeiture from the Franchise Tax Board setting forth that the suspended or forfeited taxpayer has been notified of its liability for tax or requirement to file a return under this part and that the tax has not been paid or the return has not been filed, shall constitute prima facie evidence of the facts.
Franchise Tax Board certificate of suspension forfeiture ...

Section § 23305

Explanation

This law section allows the Franchise Tax Board to issue letters that prove a company's good standing for conducting business in California. These letters verify that all tax-related obligations are met. The board can charge fees to cover the costs of processing these requests. Any money received from these fees is managed according to specific financial procedures outlined in another section of the law.

(a)CA Revenue & Taxation Code § 23305(a) The Franchise Tax Board may provide letters of good standing, verifying a taxpayer’s status for doing business in California, at a charge reflecting the reasonable costs to the department of responding to these requests.
(b)CA Revenue & Taxation Code § 23305(b) Fees received under this section shall be handled in accordance with Section 19604.
Franchise Tax Board letters of good standing business verification ...

Section § 23305.1

Explanation

If you're a taxpayer in California, you can apply to the Franchise Tax Board (FTB) for relief from certain penalties that make a contract voidable. To obtain relief, you must fill out a specific application, file necessary tax returns, and pay any due taxes, penalties, and interest. If you enter into a voluntary disclosure agreement and meet its conditions, you may satisfy some of these requirements.

There is a daily penalty for the relief period, capped at the total tax due. If your business rights were previously suspended, the relief covers that period. Once you've met all conditions, the contracts you made during the period in question aren't considered voidable, meaning they remain valid. The FTB will give you a certificate to prove this, and this information is public. Even past taxpayers with issues from 1990-1991 can apply for this relief.

(a)CA Revenue & Taxation Code § 23305.1(a) A taxpayer may make application to the Franchise Tax Board for relief from the voidability provisions of Section 23304.1. To be relieved from voidability, the taxpayer shall do all of the following:
(1)CA Revenue & Taxation Code § 23305.1(a)(1) Provide the Franchise Tax Board with an application for relief from contract voidability in a form and manner prescribed by the Franchise Tax Board.
(2)CA Revenue & Taxation Code § 23305.1(a)(2) Include on the application the period for which relief is requested in accordance with subdivision (b).
(3)CA Revenue & Taxation Code § 23305.1(a)(3) File any tax returns required to be filed under this part with the Franchise Tax Board, including returns for the period for which relief is requested.
(4)CA Revenue & Taxation Code § 23305.1(a)(4) Pay any tax, additions to tax, penalties, interest, and any other amounts owing to the Franchise Tax Board, including any liability attributable to the period for which relief is requested.
(5)CA Revenue & Taxation Code § 23305.1(a)(5) Pay any penalty imposed under subdivision (b) for the period for which relief is requested.
(6)CA Revenue & Taxation Code § 23305.1(a)(6) In the case of a taxpayer that applies for and enters into an approved voluntary disclosure agreement in accordance with Article 8 (commencing with Section 19191) of Chapter 4 of Part 10.2, for purposes of this section, the taxpayer shall be considered to have met the requirements of paragraphs (3), (4), and (5) if the taxpayer fulfills to the satisfaction of the Franchise Tax Board all the specifications of the voluntary disclosure agreement within the meaning of paragraph (2) of subdivision (d) of Section 19191 and if the Franchise Tax Board has not found that any of the circumstances described in Section 19194 has rendered the voluntary disclosure agreement null and void.
(b)Copy CA Revenue & Taxation Code § 23305.1(b)
(1)Copy CA Revenue & Taxation Code § 23305.1(b)(1) Except as provided in paragraph (2), both of the following shall apply:
(A)CA Revenue & Taxation Code § 23305.1(b)(1)(A) The period for which relief is requested shall begin on the date that one of the taxpayer’s taxable years begins and ends on the date that relief is granted.
(B)CA Revenue & Taxation Code § 23305.1(b)(1)(B) The Franchise Tax Board shall assess a daily penalty equal to one hundred dollars ($100) for each day of the period for which relief from voidability is granted, but not to exceed a total penalty equal to the amount of the tax for the period for which relief is requested.
(2)CA Revenue & Taxation Code § 23305.1(b)(2) If an application for relief from voidability is filed for a period in which an application for revivor has been filed and the certificate of revivor has been issued, all of the following shall apply:
(A)CA Revenue & Taxation Code § 23305.1(b)(2)(A) The period for which relief is requested shall begin on the date the taxpayer’s powers, rights, and privileges had been suspended or forfeited and ends on the date relief is granted.
(B)CA Revenue & Taxation Code § 23305.1(b)(2)(B) The Franchise Tax Board shall assess a daily penalty equal to one hundred dollars ($100) for each day of the period for which relief from voidability is granted, but not to exceed a total penalty equal to that amount of the tax that would be imposed under Sections 17941 and 17942 or Section 23151 and, except as provided in subparagraph (C), that penalty shall be equal to no less than the amount of the minimum tax provided under Section 17941 or 23153 for the period for which relief is requested.
(C)CA Revenue & Taxation Code § 23305.1(b)(2)(C) In the case of an exempt organization or trust subject to Article 2 (commencing with Section 23731) of Chapter 4 (the tax on unrelated business taxable income), the daily penalty provided in subparagraph (B) shall not exceed a total penalty equal to the amount of tax imposed upon its unrelated business taxable income for the period for which relief is requested.
(3)CA Revenue & Taxation Code § 23305.1(b)(3) Any penalty imposed under this subdivision shall, subject to Section 23305.2, be due and payable on demand by the Franchise Tax Board.
(c)Copy CA Revenue & Taxation Code § 23305.1(c)
(1)Copy CA Revenue & Taxation Code § 23305.1(c)(1) Upon satisfaction of the conditions specified in subdivision (a), including through the application of Section 23305.2, the following shall apply:
(A)CA Revenue & Taxation Code § 23305.1(c)(1)(A) All contracts entered into during the period for which relief is granted that have not been rescinded by a final court order pursuant to Section 23304.5 may be enforced in the same manner and to the same extent, with regard to both the parties to the contract and any third parties, as if the contract had never been voidable.
(B)CA Revenue & Taxation Code § 23305.1(c)(1)(B) Any sale, transfer, or exchange of real property in California during the period for which relief is granted and which the taxpayer at that time was not entitled to sell, transfer, or exchange by reason of subdivision (d) of Section 23302 and which has not been rescinded by a final court order pursuant to Section 23304.5, shall be as valid as if the taxpayer had not been subject to subdivision (d) of Section 23302 at the time of the sale, transfer, or exchange.
(2)CA Revenue & Taxation Code § 23305.1(c)(2) Upon being granted relief from voidability, the Franchise Tax Board shall certify that relief to the taxpayer in a form and manner as prescribed by the Franchise Tax Board. The certificate shall be issued or mailed to the taxpayer, or as directed by the taxpayer, and shall indicate the period for which relief is granted.
(d)CA Revenue & Taxation Code § 23305.1(d) The fact that a certificate of relief from voidability was issued pursuant to this section and the information contained on that certificate shall be subject to public disclosure. The certificate shall be prima facie evidence of the relief from voidability for contracts entered into during the period of relief stated on the certificate and the certificate may be recorded in the office of the county recorder of any county of this state.
(e)CA Revenue & Taxation Code § 23305.1(e) Subject to limitations set forth in Section 17 of Chapter 926 of the Statutes of 1990, a taxpayer that received a certificate of revivor between January 1, 1990, and January 1, 1991, may apply for relief from voidability under this section.
Franchise Tax Board relief from voidability application for relief ...

Section § 23305.2

Explanation

This law section allows a taxpayer to get their business or rights reinstated by the Franchise Tax Board without immediately paying any debt owed. Instead, the taxpayer can provide a commitment to pay (called an assumption of liability) or offer a bond, deposit, or other security to assure their debt will be covered, which the Franchise Tax Board must find acceptable. The Board will tell the taxpayer what kind of security or terms they need to satisfy to revive their status or avoid being voided. Using this method doesn't mean the taxpayer admits they owe the debt and doesn't erase the tax or related charges. The taxpayer must still file any required documents soon after getting relief.

Notwithstanding Sections 23305 and 23305.1 that require a taxpayer to pay any liability to the Franchise Tax Board as a condition to revivor or relief from voidability, the Franchise Tax Board shall issue a certificate of revivor under Section 23305, or of relief from voidability under Section 23305.1, if the taxpayer provides the Franchise Tax Board with an assumption of liability, or a bond, deposit, or other security for taxpayer’s liability, that is acceptable to the Franchise Tax Board. The Franchise Tax Board shall notify the person filing the application for revivor or relief from voidability of the amount of the bond, deposit, or other security, or of the terms of an assumption of liability, that must be furnished as a condition of the revivor or the relief from voidability. Obtaining revivor or voidability relief by securing the debt pursuant to this section shall not constitute an admission of liability by the taxpayer, nor relieve the taxpayer or any individual or corporation from liability for any taxes, additions to tax, penalties, or interest imposed by this part. A taxpayer that provides an assumption of liability or a bond, deposit, or other security to obtain revivor or relief from voidability may, notwithstanding Section 23305 or 23305.1, file any returns required under those sections within a reasonable time after relief is granted by the Franchise Tax Board.
Franchise Tax Board certificate of revivor relief from voidability ...

Section § 23305.5

Explanation

This section defines key terms used in the article, specifically what constitutes a 'taxpayer' and how certain terms apply to limited liability companies (LLCs). A 'taxpayer' can be either a corporation subject to state tax or a business entity recognized as an LLC by state law, a federally recognized Indian tribe, or another jurisdiction, including foreign LLCs if identified by the Franchise Tax Board. For LLCs, the term 'articles of incorporation' includes articles of organization, and 'tax' includes the taxes and fees imposed under specific sections of the law.

For purposes of this article:
(a)CA Revenue & Taxation Code § 23305.5(a) “Taxpayer” means either:
(1)CA Revenue & Taxation Code § 23305.5(a)(1) A corporation subject to tax under this chapter.
(2)CA Revenue & Taxation Code § 23305.5(a)(2) A business entity organized under a statute or law, under a state or a federally recognized Indian tribe, under another jurisdiction, if the statute or law describes or refers to the entity as a limited liability company or if regulations of the Franchise Tax Board identify a business entity organized under the laws of a foreign country as a limited liability company.
(b)CA Revenue & Taxation Code § 23305.5(b) With regard to a limited liability company:
(1)CA Revenue & Taxation Code § 23305.5(b)(1) “Articles of incorporation” shall include a limited liability company’s articles of organization.
(2)CA Revenue & Taxation Code § 23305.5(b)(2) “Tax” shall include the tax and fee imposed by Sections 17941 and 17942, or former Sections 23091 and 23092, respectively.
taxpayer definition corporation tax business entity recognition ...

Section § 23310

Explanation

This California law allows certain companies, called "qualified entities," to request forgiveness of unpaid taxes, interest, and penalties if they meet specific conditions. To qualify, a company must not have been doing business in California or must have stopped doing business and no longer have any assets. The tax forgiveness only applies to specific types of taxes and cannot exceed a certain amount. Additionally, the company must dissolve or cancel its status with the Secretary of State before the tax forgiveness can occur. The Franchise Tax Board is authorized to create regulations to implement this process, and usual government rule-making procedures do not apply in this case.

(a)CA Revenue & Taxation Code § 23310(a) The Franchise Tax Board may abate, upon written request by a qualified entity, unpaid qualified taxes, interest, and penalties for the taxable years in which the qualified entity certifies, under penalty of perjury, that it was not doing business, within the meaning of subdivision (a) of Section 23101, has ceased doing business, and does not have any remaining assets in the business.
(b)CA Revenue & Taxation Code § 23310(b) For purposes of this section:
(1)CA Revenue & Taxation Code § 23310(b)(1) “Qualified entity” means a domestic corporation subject to Division 1 (commencing with Section 100) of Title 1 of the Corporations Code or a domestic limited liability company subject to Title 2.6 (commencing with Section 17701.01) of the Corporations Code that satisfies either of the following conditions:
(A)CA Revenue & Taxation Code § 23310(b)(1)(A) Was never doing business, within the meaning of subdivision (a) of Section 23101, in this state at any time after the time of its incorporation in this state.
(B)CA Revenue & Taxation Code § 23310(b)(1)(B) Was previously doing business, within the meaning of subdivision (a) of Section 23101, and has filed all returns required under Section 18601, 18633, or 18633.5 for the tax years prior to cessation of doing business.
(2)CA Revenue & Taxation Code § 23310(b)(2) “Qualified taxes, interest, and penalties” means tax imposed under Section 17941 or 23153, and associated interest and penalties, and any penalties imposed under Section 19141. “Qualified taxes, interest, and penalties” does not include tax imposed under Section 17942, 23501, or 23731, or associated interest or penalties, and does not include additional tax, penalties, or interest resulting from a final or pending state or federal audit.
(c)CA Revenue & Taxation Code § 23310(c) In no instance shall the taxes abated pursuant to subdivision (a) exceed the minimum or annual tax imposed under Section 17941 or 23153.
(d)CA Revenue & Taxation Code § 23310(d) A qualified entity shall establish that it has ceased all business operations and has no remaining assets at the time of filing the request for abatement pursuant to this section.
(e)CA Revenue & Taxation Code § 23310(e) The abatement of unpaid qualified tax, interest, and penalties pursuant to this section is conditioned on the dissolution of a corporation or the cancellation of a limited liability company of the qualified entity with the Secretary of State prior to the abatement.
(f)Copy CA Revenue & Taxation Code § 23310(f)
(1)Copy CA Revenue & Taxation Code § 23310(f)(1) The Franchise Tax Board may prescribe any regulations that may be necessary or appropriate to implement the purposes of this section.
(2)CA Revenue & Taxation Code § 23310(f)(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.
Franchise Tax Board unpaid taxes penalties abatement ...

Section § 23311

Explanation

If a business in California was dissolved or canceled under certain conditions but keeps operating or has hidden assets, they must pay all previously forgiven taxes, interest, and penalties right away.

Additionally, they'll face a penalty of 50% of the forgiven taxes, including interest from when the tax was initially due until it was forgiven.

This penalty is on top of any other penalties the business might incur under other related tax laws.

Furthermore, certain rules about deficiency assessments don't apply to these penalties or any previously forgiven amounts that need to be paid.

(a)CA Revenue & Taxation Code § 23311(a) If a qualified entity, as defined by Section 23310, has been dissolved or canceled as described by Section 23310, but continues to do business within the meaning of subdivision (a) of Section 23101, or has any remaining assets which were not disclosed by the qualified entity at the time of request for abatement under Section 23310, the total tax, interest, and penalties that were abated pursuant to Section 23310 shall be immediately due and payable. In addition, a penalty in an amount equal to 50 percent of the total tax abated pursuant to Section 23310, plus accrued interest payable pursuant to Section 19101 on that amount for the period or periods beginning on the last date prescribed by law for the payment of that tax, determined without regard to extensions, and ending on the date the tax was abated, shall be imposed.
(b)CA Revenue & Taxation Code § 23311(b) The penalty imposed by this section is in addition to any other penalty imposed under Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401) and Part 11 (commencing with Section 23001).
(c)CA Revenue & Taxation Code § 23311(c) Article 3 (commencing with Section 19031) of Chapter 4 of Part 10.2, relating to deficiency assessments, shall not apply with respect to the assessment or collection of any penalty imposed by subdivision (a) or to previously abated tax, interest, and penalties that are due and payable pursuant to this section.
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