Did Your Nonprofit Receive a Notice of Proposed Dissolution from the Franchise Tax Board?
Background on FTB dissolution notices
The Franchise Tax Board (FTB) recently sent more than 8,500 proposed dissolution notices to certain nonprofit corporations.
As of January 1, 2016, California nonprofit public benefit, mutual benefit, religious, and registered foreign nonprofit corporations are subject to the FTB administrative dissolution (California nonprofit corporations) or administrative surrender (registered foreign nonprofit corporations) if the entity’s corporate powers have been suspended or forfeited by the FTB at least 48 continuous months.
How to avoid administrative dissolution/surrender
Once the administrative dissolution process is initiated by the FTB, the nonprofit corporation has 60 calendar days to provide a written objection to the FTB before the corporation administratively is dissolved/surrendered permanently.
To avoid administrative dissolution/surrender, a corporation may choose from the following options within 60 calendar days of the date of the notice:
Option 1 – Pay all accrued taxes, penalties, and interest with the FTB, and return to active status
Option 2 – Submit an objection and get a 90-day extension
Option 3 – Voluntarily dissolve/surrender with an FTB abatement
Is your nonprofit corporation on the list of those receiving notice?
A searchable list of the 8,500+ nonprofit corporations was posted to the California Secretary of State’s (SOS) website on September 9, 2019, the same day the letters were mailed. The list includes the corporation name on record and corporation file number issued by the SOS.
Need assistance in dissolving or reinstating your nonprofit corporation?
If your nonprofit corporation received a notice of proposed dissolution from the FTB and needs assistance in either dissolving or reinstating the corporation, please contact our team of nonprofit attorneys at Henderson, Caverly, Pum & Trytten LLP. We regularly assist clients with matters concerning the Franchise Tax Board, including curing suspensions and reinstatement of corporate and exempt status. We can be reached at (858) 755-3000 or email us via the contact button below.