When a corporation or limited liability company fails to pay its taxes, penalties, fees or interest or file a return with the Franchise Tax Board, it will be suspended. If the suspended corporation or LLC enters into a contract while suspended by the FTB, that contract may be voided at the request of any party to the contract (other than the suspended entity). Cal. Rev. & Tax. Code §23304,1. This voidability will remain unless the suspended entity requests relief from the FTB and the FTB grants the request.
A corporation or LLC suspended by the FTB may request relief by submitting this application. General partnerships, limited partnerships and limited liability partnerships may not request relief from voidability. In making the request, the corporation or LLC must specify the period for which it seeks relief. Obtaining relief costs $100 per day (not to exceed the amount of the tax for the period for which relief is requested). Cal. Rev. & Tax. Code § 23305.1(b)(1)(B). In order to obtain relief, the corporation or other entity must: (i) File any tax returns required to be filed with the Franchise Tax Board, including returns for the period for which relief is requested; (ii) Pay any tax, additions to tax, penalties, interest, and any other amounts owing to the Franchise Tax Board, including any liability attributable to the period for which relief is requested; and (iii) Pay any penalty imposed for the period for which relief is requested. Cal. Rev. & Tax. Code § 23305.1(a).
The specified period of relief is must begin on the date that one of the requestor’s taxable years begins and ends on the date that relief is granted. However, if an application for relief from voidability is filed for a period in which an application for revivor has been filed and the certificate of revivor has been issued, then the period for which relief is requested must begin on the date the requestor’s powers, rights, and privileges had been suspended or forfeited and ends on the date relief is granted. Cal. Rev. & Tax. Code § 23305.1(b)(2). There are a few more taxing details to the procedure and so readers are encouraged to familiarize themselves with the entire statutory scheme.