In early 2009, a new program will be implemented that managers or the managing member of a California limited liability company should be aware of. The Franchise Tax Board (FTB), working with the California Secretary of State, is initiating a process that will suspend/forfeit the rights, powers, and privileges of Limited Liability Companies (LLC’s) for nonpayment of taxes, penalties, or interest, and/or failure to file a return.

This program will be more aggressive in alerting the Secretary of State to LLC’s that are not paying their taxes, penalties and interest to the Franchise Tax Board. Consequently, they will be placed in “Suspended” or “Forfeited” status by the Secretary of State much sooner.

Having an LLC in suspended or forfeited status is costly. Any other party contracting with an LLC in suspended status can have that contract declared VOID and unenforceable! (California Revenue & Taxation Code 17654, 23301.5, 23304.1 and 23305.5).

Please contact us to check the status of your LLC. If it is in suspended status, we can help you get it active and avoiding possible legal exposure.