Certificate of Revivor: Everything You Need to Know
A certificate of revivor is required to lift a suspension/forfeiture from suspended corporations.4 min read
2. Losing Privileges, Powers, and Rights to Operate
4. Requirements of Form 3557
5. Letter of Proposed Relief
A certificate of revivor is required to lift a suspension/forfeiture from suspended corporations. Corporations can be suspended either by the FTB (Franchise Tax Board) for failure to file tax returns or pay its taxes, or by the Secretary of State for failure to file the annual Statement of Information.
California's Secretary of State stipulates that all domestic nonprofit corporations must file the SI-100 (Statement of Information) within a period of 90 days after it has filed its article of incorporation - and thereafter, biennially. At the point when the statement becomes due, corporations within the state must file the SI-100, irrespectively of whether they are active or not.
The fee for filing the statement is $20. Failure to file the statement attracts a penalty fee of $50, regardless of the nonprofit's tax-exempt status.
Notice of Pending Forfeiture/Suspension
The California SOS sends a Notice of Pending Forfeiture/Suspension to corporations that are at risk of suspension due to failure to file the Statement of Information. This notice is usually sent approximately three months before the due date.
Once the deadline is missed, the SOC sends a delinquency letter to the corporations at fault, granting them an additional 60 days to file the statement before they are suspended.
Corporations that have been suspended can be revived; however, the method of revival depends on whether the corporations were suspended by the FTB (Franchise Tax Board,) the SOS (Secretary of State,) or both. Individuals can request information/status reports on the type of forfeiture or suspension from the California SOS.
Losing Privileges, Powers, and Rights to Operate
If your corporation has been suspended, you should take steps to revive it as soon as possible. Once suspended, your business loses the privileges, powers, and rights to operate/conduct business within the state, as well as the rights to use the name. This means that once suspended or forfeited, another corporation could register and operate with your business name. The original business owner loses all rights to the name and has to register a new name before the business can be revived.
A suspended business/corporation cannot enforce its legal contracts, defend itself in lawsuits, or initiate lawsuits; however, other parties can legally enforce their terms on the suspended business.
Also, a business that enters into a contract while forfeited or suspended is unable to enforce the contract unless it obtains a relief of contract voidability.
Corporations that have been forfeited or suspended by the California SOS can request a revival by filing an updated Statement of Information in person, online or by mail. To revive a California corporation, individuals will pay a penalty fee of $250 and a filing fee of $25.
Corporations that have been forfeited or suspended by the FTB must file form FTB-3557 BC_Application for the Certificate of Revivor, file all late tax returns, and pay all outstanding balances.
Requirements of Form 3557
Once Form 3557 has been filled, it can be submitted by a corporate creditor, shareholder, corporate officer, or a majority of the board of directors. However, only officers can sign and file the back tax return required to obtain a certificate of revivor.
Filing the Form 3557 requires the following:
- Filing any delinquent tax returns
- Paying any delinquent taxes, inclusive of interest and penalties.
The FTB takes about six weeks to process an application for the certificate of revivor, although there are instances where they could consider an expedited review.
For corporations that have been suspended by both the FTB and the SOS, they must first file a Statement of Information with the SOS to get a letter for proposed relief from forfeiture or suspension.
Letter of Proposed Relief
After receiving a letter for proposed relief, suspended businesses should submit copies to the Franchise Tax Board with their applications for the certificate of revivor. Once these filings are submitted, the suspended LLC will be revived.
If the Franchise Tax Board is satisfied that the suspended corporation is compliant, (this entails paying all outstanding taxes and penalties, filing back tax returns, and submitting Form 3557,) it issues a certificate of revivor.
But before it does so, it checks with the SOS to determine the availability of the corporation's name. This is because a new corporation can register and use the name of the suspended/forfeited business during the period of suspension.
After issuing the certificate of revivor and reinstating the corporation, the FTB will inform the SOS. The SOS then updates its website to show an active corporate status. This may take several days.
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