Posted in: Blog, Posted On: 27-01-2015, Posted By: stevenadmin

The California Franchise Tax Board has the power to suspend your corporation for failure to file a corporate return and or pay the corporate taxes due.  A corporation whose powers have been suspended for nonpayment of the corporate franchise tax lacks capacity to sue in California courts; and, if sued, it lacks the capacity to defend.  Rev. & Tax C. §23301; Reed v. Norman (1957) 48 C2d 338, 342, 309 P2d 809, 811.

Similarly, a corporation suspended under Corps. Code §2205 for failure to file the statement of information required by Corps. Code §1502 lacks capacity to sue or defend itself.  [Palm Valley Homeowners Ass’n, Inc. v. Design MTC (2000) 85 CA4th 553, 560, 102 CR2d 350, 354-355].

But wait, there's even more good news.  Anyone who purports to exercise that rights and powers of a suspended corporation–possibly including a lawyer who appears on its behalf–is guilty of a misdemeanor.  [Rev. & Tax C. §19719] 

Finally, a lawyer who knowingly represents a suspended corporation and conceals this fact from the court may be subject to sanctions.  [Palm Valley Homeowners Ass’n, Inc. v. Design MTC, supra, 85 CA4th at 563, 102 CR2d at 357]. Id. at ¶ 2:90.1.

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