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We formed an S Corp in California. We moved a few years later and severed all presence in California. We registered as a foreign entity in our new state, and we pay the applicable corporate taxes in the new state as a foreign entity. We don't have $500k or 25% of revenue coming from CA, and we don't have any locations, workers, or property in CA. We were led to believe by our accountant that severing all presence in CA would eliminate FTB fees. We just got a letter from FTB saying that we owe the minimum S Corp fees plus penalties in CA because we're still an active CA corporation (without any CA presence). Which is correct? Our accountant, or the FTB?
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Unfortunately, the fees don't stop until the final corporate tax return is filed with the FTB and the entity is dissolved with the California Secretary of State. Until that is done, the FTB will continue to assess the minimumum tax of $800 plus interest and penalties.
The good news is that since it is assessed against the corporation you are not personally liable for the fees. The bad news is that if the corporation has assets you may need to pay to stop the FTB from attempting to levy the corporate bank accounts and accounts receivables.
Answered on Aug 08th, 2014 at 2:13 PM