![]() ![]() Upon the issuance of the certificate of revivor by the Franchise Tax Board, the taxpayer “shall become reinstated but the reinstatement shall be without prejudice to any action, defense or right which has accrued by reason of the original suspension or forfeiture.” In most situations, the reinstatement is given retroactive effect so as to “validate otherwise invalid prior action.” This rule applies to matters occurring both before and after judgment, such as the filing of a notice of appeal while the entity was suspended. The Franchise Tax Board may limit such a revivor as to (1) time or (2) the functions the revived corporation can perform, or both, and the entity’s powers, rights, and privileges may again be suspended or forfeited if the Board determines that the prospects for collection of the full amount due have not been improved by the entity’s revivor. Notwithstanding the general requirement that all outstanding taxes, penalties, and interest be paid, the Franchise Tax Board may reinstate an entity to good standing without full payment of the taxes, penalties, and interest due if the Board determines that doing so will “improve the prospects for collection of the full amount due” from the entity. An entity is reinstated when the Franchise Tax Board grants the application and issues a certificate of revivor. Because the business entity’s corporate powers, rights, and privileges have already been suspended, the application must be filed by an individual or individuals, such as a stockholder or creditor, acting on behalf of the entity. An application for revivor is made on Form FTB 3557 BC for a corporation and Form FTB 3557 LLC for a limited liability company. ![]() Īny business taxpayer that has suffered the suspension or forfeiture of its corporate powers, rights, and privileges may be reinstated to good standing, or “revived,” by (1) filing an application for a certificate of revivor with the Franchise Tax Board, (2) filing all required tax returns, and (3) paying the tax that is due, together with additions to tax, penalties, and interest. If a business nonetheless makes a contract during the period when its powers, rights, and privileges are suspended or forfeited, then the other party to the contract may bring suit to have the contract declared voidable and rescinded by a court. The suspended or forfeited powers cover essentially all of the entity’s ability to function, including transacting business, making contracts, suing and being sued, and buying or selling real or personal property. If a corporation or limited liability company fails to pay its annual tax or fails to file a tax return, then its corporate powers, rights, and privileges may be suspended or forfeited when the failure is reported by the California Franchise Tax Board. Corporations and limited liability companies must pay an annual tax for the privilege of doing business in California.
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