Have you stopped doing business with your California “Domestic Corporation” or “LLC” but are still getting billed $800 each year? FTB may be able to abate that tax!
Source: California Franchise Tax Board November 2019 Tax News
Administrative Dissolution Program
We established the Administrative Dissolution Program on January 1, 2019, allowing a qualified domestic Corporation or qualified domestic Limited Liability Company (LLC) the ability to request a Voluntary Administrative Dissolution/Cancellation.
This Program authorizes us to abate, upon written request by a qualified entity, the unpaid qualified taxes, penalties and interest for the taxable years in which the entity certifies under penalty of perjury it has ceased doing business or never conducted business, and has no remaining assets in the business name. It does require the entity to file and pay in full for the tax years in which it conducted business.
The entity must submit a request form to us by mail or fax. Only an officer, owner, member, director, or a FTB approved POA is authorized to request Administrative Dissolution/Cancellation.
Request forms to submit by entity:
Corporations: Domestic Corporation Request for Voluntary Administrative Dissolution (FTB 3715 PC)
Limited Liability Companies (LLC): Domestic Limited Liability Company Request for voluntary Administrative Cancelation (FTB 3716 PC)
Applying for Administrative Dissolution will not legally terminate a business. The entity is still required to submit the Certificate of Dissolution/Cancellation document to the Secretary of State to close their business.
Please refer to sos.ca.gov for more information.
The entity may qualify if one of the following applies:
The entity has been registered for more than 12 months, did business for multiple years, has filed and paid in full for those tax years it conducted business, has no remaining assets in the business name, and never filed the Certificate of Dissolution/Cancellation document with the Secretary of State
The entity has been registered for more than 12 months, never conducted business, has no assets in the business name and never filed the Certificate of Dissolution/Cancellation document with the Secretary of State
The entity has filed a Certificate of Dissolution/Cancellation document with the Secretary of State, and there are outstanding returns or balances for taxable years in which the entity was not conducting business and was registered with the Secretary of State
The entity will not qualify if one of the following applies:
The entity stopped doing business within the last 12 months. The entity needs to file a timely final tax return to the FTB and file their Certificate of Dissolution/Cancellation document with the Secretary of State
The entity has not conducted any business and has been registered for less than 12 months with Secretary of State. The entity needs to file a final tax return with the FTB and file their Short Form Dissolution Certificate /Short Form Cancellation Certificate document with the Secretary of State
The entity has remaining assets in the business name. This typically includes: bank accounts, properties, debit to shareholders, etc.
The program has no benefits for the entity if one of the following applies:
The entity has filed and paid up to the current tax year and there are no taxable years to abate
The entity filed a timely final return for taxable year 2017 or 2018 and is still within the one year timeframe for closing a business. In this instance, there are no taxable years to abate
Additional information is available at our Administrative Dissolution/Cancellation webpage.
Beginning January 2020, we will initiate the Administrative Dissolution/Cancellation for entities that are suspended by us for 60 or more consecutive months and appear to have no business activity. More information regarding this process will be shared in upcoming Tax News articles.
For more information click here: https://www.ftb.ca.gov/about-ftb/newsroom/tax-news/july-2019/All-About-Business.html