Lindsay Spiller- Lindsay Spiller
What does "FTB Suspended" mean?
Updated: Dec 18, 2022
What is “FTB Suspended?”
A search for businesses at the California Secretary of State’s website (https://www.sos.ca.gov) can sometimes result in a business labeled “FTB Suspended.” Such a label means that the business has been suspended by the California Franchise Tax Board.
How does a business become suspended?
A business is required to comply with certain requirements in order to maintain good standing with the State of California. For example, a business is required to file a tax return and pay its taxes or it can be suspended by the Franchise Tax Board (FTB). In California, a business entity registered with the California Secretary of State (SOS) must file and pay at least an $800 franchise or annual tax from its registration date to the current date, regardless of business activity, or it will be subject to suspension by the FTB.
The SOS may also suspend a business for not filing the required Statement of Information. It is possible for a business to be suspended by the SOS and the FTB at the same time.
What does it mean when your business is suspended?
If your business is suspended, you cannot:
Legally do business
Sell , transfer, or exchange real property
File taxes with an automatic extension
File a claim for a tax refund
Start or continue a protest
Legally close or dissolve your business
Bring an action or defend your business in court
File or maintain an appeal before the Office of Tax Appeals
Maintain the right to use your business name
Retain tax-exempt status (it will be automatically revoked as of the suspension date)
Other penalties:
Your business may be subject to a $2000 penalty per tax year for failure to file missing tax returns within 60 days after receiving a written demand to do so.
Contract Voidability:
If you enter into any contracts while you are not in good standing, the other party can void the contract. Also, unless you apply for and are granted relief from contract voidability, your business contracts will remain voidable and unenforceable.