It can take 60 calendar days or eight weeks to revive a Franchise Tax Board (FTB) suspended corporation in California. It starts when you give notice of your intent to return your corporation to active status and pay a $25 filing fee and a $250 penalty fee.
It can be frustrating when your business gets suspended by the California Secretary of State (SOS) and FTB. However, the solution to preventing or resolving a business suspension is relatively easy. Here is a look at what a business suspension means, why it happens, and the steps you can take to get out of this problem.
FTB Suspended California Corporation Definition
The California FTB will suspend a corporation in California if it fails to file or pay taxes, exemption papers, or a Statement of Information. When the SOS gives a corporation the suspension label, it can only do business once it completes the revivor process.
Reviving an FTB Suspended Corporation
There are many reasons why you should revive a suspended corporation. A suspension is the main reason that you cannot do business. You can face criminal penalties if you continue to do business, and all your clients can cancel their contracts with your corporation. Your corporation also loses its ability to represent itself as a plaintiff or defendant in court.
Restoring Your Corporation’s Good Standing with the California FTB
Filing and paying off all your tax debt is the primary way to restore your corporation’s good standing with the California FTB. Paying off your tax debt includes all fees, penalties, and interest.
The Benefits of Restoring Legal Compliance for Your Corporation:
Get Back to Business
There are many benefits to restoring your corporation’s legal compliance with the California FTB. The primary benefit is you can resume business activities without criminal or financial penalties.
Protect Your Corporation’s Assets
Legal compliance enables you to protect your corporation’s assets from creditors who could seize these assets to pay off your tax debt.
Maintain Contracts and Agreements with Clients and Vendors
You can resume doing business with your clients and vendors and maintain contracts and agreements with them when your corporation is legally compliant. Maintaining your relationship with clients and vendors will help to improve your business reputation.
Access Various Financial Services to Grow Your Business
You can only access business loans and lines of credit when your corporation legally complies with the California FTB. Reviving and keeping your corporation in legal compliance will enable you to access various financial services to grow your business.
Maintain and Grow Your Business Relationships
Nobody wants to do business with a corporation that is not legally compliant. They want to trust the company that they do business with. You can maintain business relationships and meet new clients and vendors when your corporation is legally compliant.
Preserve Your Corporation
You can lose your corporate entity if your corporation is not in legal compliance. You can avoid having to start all over and preserve your corporation by paying your business tax debt, including all fees, penalties, and interest.
Avoid the Accumulation of Penalties
Penalties will accumulate if you do not get your corporation into legal compliance as soon as possible. This accumulation can put you in a deeper financial hole. You can work with the California FTB and SOS to get your corporation back in legal compliance to avoid additional penalties.
Increase the Potential for More Business Transactions
Business transactions are the lifeblood of your corporation. However, you cannot conduct business if your corporation is out of legal compliance with the California FTB. You can get back to business once you restore the legal compliance necessary.
Revive Your FTB Suspended Corporation with These Steps
Follow these five steps to revive your California FTB-suspended corporation:
Step 1: Obtain and Submit the Required Paperwork
The primary paperwork you need to revive a corporation is the Application for Certificate of Revivor – Corporation (FTB 3557 BC). There is also paperwork if you have a Limited Liability Company or Partnership.
Step 2: Statement of Information
The Statement of Information is another piece of paperwork you must submit to revive your suspended corporation. This document provides the California SOS with information about your company.
Step 3: Pay Off Your Tax Debt
You can submit all the paperwork, but you can only revive your corporation and return to business once you pay off all your tax debt, including penalties, fees, and interest.
Step 4: File Delinquent Tax Returns to Revive Your Corporation
You cannot revive your corporation until you file delinquent tax returns with the California FTB. You can contact the California FTB to verify which tax years are delinquent.
Step 5: Pay the Filing Fee for Reactivation
Reviving your corporation in California requires you to pay a $25 filing fee and a $250 penalty fee. You can also pay an extra $15 to have the state expedite the processing of the paperwork.
Processing Times
You want to have an efficient processing time when you are trying to revive your corporation. However, once you submit the paperwork and pay all the taxes, fees, penalties, and interest, it can take the state some time to process your request. Here is what you can expect.
Current Processing Time for Reviving an FTB Suspended Corporation
Processing times to revive an FTB-suspended corporation can vary depending on your circumstances. It currently takes two to five business days to reinstate a suspended corporation once everything is approved. It takes the California FTB about six weeks to process a Revivor application, and it can take the California SOS up to eight weeks to process your information.
Prevent Delays in Processing Times
Several factors can delay the California FTB and SOS processing times to revive your corporation. You must pay all outstanding balances, file and pay all delinquent taxes, and apply for a Certificate of Revivor before these agencies can complete your request.
Frequently Asked Questions
How do I reactivate a suspended corporation in California?
To reactivate a suspended corporation, you must file a Statement of Information. There is a $20 filing fee, a $250 FTB penalty, and other fees and penalties that you must pay. Finally, you must apply for a Certificate of Revivor.
How long does it take to revive a California corporation?
It normally takes eight weeks for the Secretary of State to process the paperwork to revive a corporation in California.
What happens when a California corporation is suspended?
A suspended California corporation longer has rights and privileges as a corporation and can no longer do business. It also cannot sue or defend itself in court.
What does suspend mean, California FTB?
The FTB can suspend a business when it fails to file or pay taxes. As a result, it can no longer do business in California.
Can a suspended corporation defend itself in California?
A suspended corporation does not comply with the California Secretary of State requirements. Therefore, it cannot defend itself in court, even if it has the money to cover the cost of defense.
How do I dissolve a suspended corporation in California?
Going through the revivor process will enable you to dissolve a suspended corporation in California. You will need to be in good standing with the California FTB.
How long does reviving an LLC in California take?
The time it takes to revive an LLC will vary, but it can take five to seven business days.
Can I reopen a closed corporation?
You can open a closed corporation in California if you file and pay all delinquent taxes, file a revivor request application, and file a Statement of Information form with the Secretary of State.
Why was my business suspended in California?
A business suspension can happen if you do not file a tax return or pay taxes. You can go to the MyFTB account page to find the specific reason for the suspension.
Can I use a suspended LLC name in California?
You cannot use a suspended, forfeited, or canceled LLC name in California. You can use the chosen name for your LLC if none of these situations are present.
What is Section 19719 of the California Revenue and Taxation Code?
Section 19719 prevents you from pretending to operate a suspended company. It also prohibits you from operating a suspended company representing a foreign company to conduct intrastate business in California. Penalties include a fine of $250 to $1,000, up to one year in jail, or both.
How do I check my corporation status in California?
You can check your corporation status by visiting the California Secretary of State website at www.sos.ca.gov. You can also visit bizfileonline.sos.ca.gov to get a Certificate of Status.
Can you suspend without pay in California?
As a business owner, you can suspend an employee without pay in California for disciplinary reasons or during an investigation of their misconduct.
What is the CA FTB penalty rate?
The California FTB imposes a 5% penalty on unpaid taxes plus a 0.5% penalty for each month you do not pay the taxes from the original due date. Also, the California FTB can impose a minimum late file penalty of $135.
What is the state of California surplus refund?
Eligible Californians received a one-time Middle-Class Tax Refund payment between October 2022 and January 2023. Californians making $500,000 or less received a payment ranging from $400 to $1,050. Those making over $500,000 were not eligible for the MCTR.
What is tax forgiveness in California?
The taxing authorities in California, including the FTB, can agree to enable you to settle a tax debt with an FTB Offer in Compromise. The settlement will be less than the amount you owe on the tax debt.
FTB Suspended Reasons
You can have your business suspended in California if you fail to file a tax return or pay taxes, including penalties, fees, and interest. You can go to the California FTB and log into MyFTB for account information about your taxes.
How do you fix a suspended FTB?
Fixing a suspended FTB means paying any outstanding due balances and paying all delinquent taxes, including interest, fees, and penalties. Then, you must apply for a Certificate of Revivor through the FTB Revivor Unit. You may lose your company name during the suspension. You can resume business activities once you get approval.
Can you reinstate a terminated LLC in California?
You can reinstate a terminated LLC in California when you find the reasons and resolve the issues that caused the suspension. You must obtain a Certificate of Status, submit a reinstatement application, and wait for approval. Once you receive the approval, you can resume business operations and notify stakeholders and creditors.
How do I revive an SOS suspension?
The FTB can only suspend your business if you do not meet your tax obligations. You can revive your business if you are in good standing with the Secretary of State. You must also complete one of three applications:
• Application for Certificate of Revivor – Corporation (FTB 3557 BC)
• Application for Certificate of Revivor – Limited Liability Company (FTB 3557 LLC)
• Application for Confirmation Letter for Limited Partnership Revival (FTB 3557 C LP)
FTB 3557 Instructions
All three applications are straightforward to fill out. FTB 3557 BC is a one-page document that you can find on the FTB website. It asks for your business information, such as entity name and address. You must complete the application and include any payments, then send it to:
Business Entity Correspondence
Franchise Tax Board
PO Box 942857
Sacramento, CA 94257-4040
You can only request FTB 3557 LLC by providing the FTB your email address. They will send the application to you. Finally, the FTB 3557 C LP is a simple one-page document you can download on the FTB website. You are to send this application along with any payments to:
Franchise Tax Board
PO Box 942857
Sacramento, CA 94257-0031