Franchise Tax Board Proposed Dissolution Notices Sent to Thousands of Nonprofit Organizations

California nonprofit public benefit, mutual benefit, religious, and registered foreign nonprofit corporations are subject to the Franchise Tax Board’s (“FTB”) administrative dissolution (California nonprofit corporations) or administrative surrender (registered foreign nonprofit corporations) process if the entity’s corporate powers have been suspended or forfeited by the FTB for at least 48 continuous months.

In September, more than 4,000 proposed dissolution notices were sent to entities meeting this criteria. The notices were mailed to the entity’s last known mailing address.

Once the FTB initiates the process, the nonprofit corporation has 60 calendar days to act before the corporation is administratively dissolved/surrendered permanently. If no action is taken by the nonprofit, the corporation will be dissolved/surrendered administratively, effective 60 calendar days from the date of the notice.

To avoid administrative dissolution/surrender, a nonprofit organization may choose from the following options within 60 calendar days of the date of the notice:

• Option 1: Pay and return to Active Status. The corporation must pay or satisfy all accrued taxes, penalties, and interest with the FTB, and must have a current Statement of Information on file with the California Secretary of State.

• Option 2: Submit an objection and get a 90-Day Extension. The objection should be mailed to: Exempt Organizations Unit MS F120, Franchise Tax Board, PO Box 1286, Rancho Cordova, CA 95741-1286.

• Option 3: Voluntarily dissolve/surrender with an FTB Abatement.

The Secretary of State’s website has additional information available. Additionally, the list of suspended entities is available on the Secretary of State’s website.

If your corporation received a notice letter from the FTB regarding a proposed dissolution and you require assistance, please contact nonprofit attorney Jonathan Grissom.