Do I owe minimum corporate taxes even after dissolution?

September 10, 2003

Subject:  FTB trying to collect Crop min tax

From:  Steve
Date:  Wed, 27 Aug 2003

The California State Franchise Tax Board has billed me for $800 plus some interest and penalty to cover the minimum State corporation tax for operations in 2003. The corporation was closed in 2002.

The filing for tax clearance was filed later in May of 2003. The FTB is using the filing date of the tax clearance request where I am using the actual closing date of 2002.

Do I owe the State the minimum tax for 2003? What is the process for disputing the tax?

Steve

Answer

Date:  Fri, 29 Aug 2003

Hello Steve,

The date of dissolution is based on the date the Secretary of State actually received the Certificate of Dissolution, assuming all of the assets have been sold, bills paid and monies distributed to the shareholders by that date. The dissolution is contingent on the Tax Clearance Certificate being issued. When the Tax Clearance Certificate is issued, the dissolution is retroactive to the date the Secretary of State received the Certificate of Dissolution.

If the company still owned assets, the liquidation isn't effective until the Tax Clearance Certificate is issued.

(By the way liquidating limited partnerships are having similar problems. You have to file forms with the Secretary of State to stop the $800 minimum tax.)

I don't have enough facts to advise you. If an attorney helped you with the dissolution, that person can help you resolve these issues. If this was a "do it yourself" job, you will need to call the Secretary of State's office (try 916-657-5448) and the Franchise Tax Board (800-852-5711).

Good luck!
Mike Gray

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