FTB initiated Administrative Dissolution process to begin in January 2021 December 2020 Tax News

The start date for the FTB initiated administrative dissolution program was delayed due to COVID-19, but will now begin in January 2021. Under the involuntary (FTB initiated) dissolution process, we may initiate an administrative dissolution of a domestic corporation or administrative cancelation of a domestic limited liability company (LLC) if the following requirements are met, the entity has:

  • Been suspended by FTB for 60 or more consecutive months
  • Never done business in California at any time after the time of its incorporation in this state or has ceased doing business
  • Paid all taxes, penalties and interest due as of the date the entity ceased doing business
  • Filed all returns due as of the date the entity ceased doing business
  • Been notified

Currently, FTB is only processing requests for voluntary dissolutions. A domestic corporation or domestic LLC may submit a written request for abatement of unpaid qualified tax, interest, and penalties. You can learn more about this process and whether an entity qualifies at our voluntary administrative dissolution/cancelation webpage.

It’s important to note that if an entity has been dissolved but continues to do business, or has remaining assets that were not disclosed by the entity when the request for abatement was made, the abated qualified tax, interest, and penalties will be immediately due and payable. In addition, a 50% penalty of the total tax abated plus interest may be assessed in addition to any other penalty imposed.

Approximately one-third of the requests for voluntary dissolutions, since January 2019 have been approved. The two most common reasons why business entities do not qualify are they have remaining assets or they have not filed and paid up to the business cessation date.