California Franchise Tax Board – Suspended Exempt Entities
The Franchise Tax Board or the California Secretary of State can suspend an exempt organization for a number of reasons. Suspension affects an organization’s tax-exempt status. It also affects its ability to enforce contracts.
A suspended organization can get back into good standing and regain its tax-exempt status.
Suspension causes and tax-exempt effects
There are three primary ways an organization may become suspended:
Failure to file a Statement of Information with California Secretary of State's office.
Failure to pay an amount due.
Failure to file any past due returns with the Franchise Tax Board.
An organization cannot legally transact business, defend, or initiate an action in court, protest assessments, or file a claim for refund of paid amounts when the Franchise Tax Board or the Secretary of State suspends it. It also loses the right to use its name.
To verify an organization’s current status with the Franchise Tax Board or the Secretary of State, visit kepler.sos.ca.gov. The website only lists organizations that incorporated or qualified with the Secretary of State.
Tax-exempt status revocation
The Franchise Tax Board revokes an organization’s tax-exempt status the day either the FTB or Secretary of State suspends it. To verify your organization's status with the Franchise Tax Board, visit the FTB's website.
Contract voidability is when a suspended or forfeited organization loses its right to enforce its legal contracts. If an organization enters into a contract while suspended or forfeited and then revives its active legal status, it cannot enforce that contract unless it gets relief from contract voidability. For more information about Contract Voidability and request relief from contract voidability, see the Franchise Tax Board’s website.
Has Your Nonprofit Organization Has Been Suspended?
If your organization has been suspended by the FTB and/or the Secretary of State, or the Franchise Tax Board has revoked your organization's exempt status and you need assistance, please contact our office at the button below.