The California Secretary of State and Franchise Tax Board recently announced that starting in 2009, a limited liability company ("LLC") may have its powers, rights and privileges suspended if it does not: (1) file annual income tax returns; (2) pay the annual franchise tax of $800 and the total income statutory fee, if required; and (3) file the Statement of Information (LLC-12) that must be updated every two years.
When the LLC is suspended, it loses the right to the use of its name and its ability to prosecute or defend an action in court and its contracts may be voidable and unenforceable. In short, the suspended LLC cannot legally conduct business in California. Moreover, if a suspended LLC continues to conduct business in California, a court may find that there is no limited liability protection for its members.
After suspension by the Secretary of State or Franchise Tax Board, the LLC may be revived by the State of California if it files the delinquent documents and pays the delinquent taxes, penalties and interest owed to the Secretary of State and Franchise Tax Board.
If you have any questions regarding your LLC or would like assistance to revive your LLC, please contact a member of our Corporate and Business Law Group.