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Suspension and Revivor 101, Part 2

In last month’s article, we discussed how a corporation or LLC becomes suspended or forfeited. In this article, we will discuss the effects of suspensions or forfeiture and the revivor process.

Effects of Suspension and Forfeiture

When a corporation or LLC is suspended or forfeited it loses its powers, rights, and privileges. A suspended or forfeited corporation or LLC cannot:

  • Legally transact business.
  • Enforce contracts.
  • Bring an action or defend itself in court.
  • Be granted an extension of time to file.
  • File a claim for refund or amended return.
  • File or maintain an appeal before the Board of Equalization.
  • Begin or continue to protest an assessment.
  • Sell, transfer, or exchange real property.
  • Keep their exclusive rights to the entity’s name.

In addition, corporations may be subject to a $2,000 penalty while doing business while they are suspended or forfeited. We discuss this penalty, along with the Secretary of State and contract voidability penalties in more detail in next month’s article.

Authorized Activities During Suspension or Forfeiture

Corporations or LLCs are limited in what they can legally do while they are suspended or forfeited. They may:

  • Apply for reviver.
  • Pay any balance due.
  • File delinquent returns to revive.
  • Amend their Articles of Incorporation (corporations) or Article of Organization (LLCs) to change their name
  • Apply for exempt status.
  • Amend their Articles of Incorporation (corporations) or Article of Organization (LLCs) to perfect their exempt application.

The Revivor Process

The revivor process starts with a phone call to our Revivor Unit at 888.635.0494 to determine what your client needs to do to bring their corporation or LLC into compliance (aka “good standing”).

Mail-In Revivor

After you contact us, we send you or your client:

  • Written revivor requirements.
  • Application for Certificate of Revivor.
  • Information on contract voidability.

It takes approximately six weeks to process the revivor request once we receive the entity’s information.

Rush Revivor

If your client cannot wait six weeks and does not meet the requirements for a walk-through revivor, your client can take their paperwork, completed returns, and payment to one of the following district offices:

  • Los Angeles.
  • Oakland.
  • Sacramento.
  • San Diego.
  • San Francisco.
  • Santa Ana.

The entity will receive its revivor certificate in approximately 10 to 14 days.

Walk-through Revivor

A walk-thru revivor is done when your client’s entity has to be revived immediately because of escrow closing, litigation or a pending loan or a federal grant. This type of revivor takes one day to complete after you or your client contact us. A walk-through revivor can only be done in one of the district offices listed above.

Important: You must call us at 888.635.0494 at least 24 hours in advance to arrange a walk-through revivor. We also highly recommend that your client arrive early in one of our district offices because there are no appointments at the public counter.

Your client must take all of the following to the district office:

  • All returns, paperwork, and monies due. The payment must be in guaranteed funds such as cashier's check, certified check, money order, or cash. We do not accept corporate checks. If the entity is subject to mandatory Electronic Funds Transfer (EFT) payment requirements they still must pay by guaranteed funds. We will not assess an EFT penalty in this case.

  • Copies of the actual escrow, loan, or pending litigation papers, in the entity’s name. We will not accept a letter from their attorney, CPA, or representative stating this information.

  • A separate certified payment for the $100 fee. The fee must also be paid in guaranteed funds.

Next month, we cover the penalties that are associated with suspension and forfeiture.

Back to September 2010 Tax News