Archive - Tax Clearance prior to 1/01/2006
This information is available for historical purposes only. See Closing a business entity for current law provisions.
Limited partnerships do not require tax clearance to cancel registration. However, they are subject to the $800 annual tax for each taxable year until they cancel their registration with the California Secretary of State. To cancel registration, domestic registered limited partnerships must file Form LP-3, Certificate of Dissolution AND Form LP-4/7, Certificate of Cancellation. Foreign registered limited partnerships file only Form LP-4/7.
If you're closing a business entity in California and need a Tax Clearance Certificate, you must complete a Request for Tax Clearance. The appropriate instructions and request form for your entity type are listed below:
Domestic Stock and Foreign Corporations
- FTB Pub 1038 - Instructions for Corporations Requesting a Tax Clearance Certificate
Additional information about Tax Clearance Certificates:
- Suspended or forfeited business entities will not receive a Tax Clearance Certificate. These entities must pay all outstanding balances due, file any delinquent returns, and then request that the entity be revived to good standing before we will issue a certificate. For information regarding a Tax Clearance Certificate or how to revive the entity, call our automated telephone number 800.852.5711.
- All domestic nonprofit corporations must obtain a Tax Clearance Certificate from the Franchise Tax Board to complete their dissolution with the Secretary of State. Additionally, all public benefit corporations, all religious corporations, and those mutual benefit corporations holding charitable assets in trust must obtain a document issued by the California Attorney General that either waives objections to the distribution of the corporation's assets or confirms that the corporation has no assets.
- All qualified foreign corporations must obtain a Tax Clearance Certificate from the Franchise Tax Board to surrender with the Secretary of State.
- Corporations not incorporated or qualified in California must file a final tax return with the Franchise Tax Board to terminate. The Secretary of State does not require a Tax Clearance Certificate or any other action for a non-qualified corporation to terminate. For more information you may call the Franchise Tax Board at 800.852.5711.
- The time to obtain a Tax Clearance Certificate can vary greatly. The assumer method is the quickest way to obtain a Tax Clearance Certificate, taking approximately 30 days. The other methods of posting a cash or surety bond or taxes paid basis can take up to 9 months or even longer (depending on the circumstances). The issuance of the Tax Clearance Certificate will be delayed if the Franchise Tax Board must request payment of any outstanding balances due (including estimates) or the filing of any delinquent returns.
- Common errors can delay the issuance of a Tax Clearance
Certificate. If the Secretary of State does not officially close your
business entity by the end of its normal accounting period, you may be subject
to the assessment of additional taxes. Depending on the length of the delay,
your business entity could also owe additional penalties, interest, and
fees. To avoid possible delays, you should:
- Be sure the required paperwork that you submit to the Secretary of State is complete and accurate. Errors or incomplete paperwork can cause your request to be returned without a valid conditional dissolution date (domestic corporations) or pending cancellation (limited liability companies).
- Remember to sign the assumer document, if you choose to use the assumer method. If the assumer is not an individual, you must have the assumer document notarized.
- File all outstanding tax returns and pay all balances due. Inactive business entities may be liable for filing returns and paying additional tax if they are not officially closed through the Secretary of State.
- Provide a correct and legible telephone number and address that will be in service for several months after the business entity ceases its operations.
- Complete and provide the required financial statement.
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