FTB's New Legislation: A Guide to Voluntary Dissolution for Corporations and LLCs
The California Franchise Tax Board (FTB) has provided guidelines for the voluntary administrative dissolution or cancellation of qualified domestic corporations and limited liability companies (LLCs). This process allows these entities to be dissolved or canceled if they meet certain criteria and submit a written request to the FTB.
Key points include:
Eligibility Requirements: A qualified entity must not be actively engaging in business for profit, must have ceased operations, and should have no remaining assets.
Process: The entity must file any outstanding tax returns, pay all dues, and submit a final tax return. They must also file the necessary dissolution or cancellation forms with the California Secretary of State (SOS) within 12 months of filing the final tax return.
FTB’s Role: Once the SOS approves the dissolution or cancellation, the FTB may abate any unpaid taxes, fees, penalties, or interest owed by the entity.
Legislative Background: The ability for the FTB to administratively dissolve or cancel these entities stems from Assembly Bill No. 2503, which was signed into law in 2018 (WKBKY Attorneys at Law) (Cal Corp Law Blog) (FTB California).
For more detailed information, you can visit the FTB's official page on closing a business entity here.