AB 1143, as amended, Skinner. Tax administration: suspension or forfeiture: limited liability companies.
Existing law provides that specified limited liability companies and corporations that are suspended or forfeited for failure to file a tax return or for failure to pay delinquent taxes, penalties, or interest are subject to specified consequences, including contract voidability for the period in which the entity is suspended or forfeited.
This bill would subject foreign nonregistered limited liability companies to contract voidability where the foreign nonregistered limited liability company is subject to suspension or forfeiture for failure to file a tax return or for failure to pay delinquent taxes, penalties, or interest.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2⁄3. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 23304.1 of the Revenue and Taxation
2Code is amended to read:
(a) Every contract made in this state by a taxpayer
4 during the time that the taxpayer’s powers, rights, and privileges
5are suspended or forfeited pursuant to Section 23301, 23301.5, or
623775 shall, subject to Section 23304.5, be voidable at the instance
7of any party to the contract other than the taxpayer.
8(b) If a foreign taxpayer that neither is qualified to do business
9nor has an account number from the Franchise Tax Board, fails to
10file a tax return required under this part, any contract made in this
11state by that taxpayer during the applicable period specified in
12subdivision (c) shall, subject to Section 23304.5, be voidable at
13the instance of any
party to the contract other than the taxpayer.
14(c) (1) For purposes of subdivision (b), the applicable period
15shall be the period beginning on January 1, 1991, or the first day
16of the taxable year for which the taxpayer has failed to file a return,
17whichever is later, and ending on the earlier of the date the taxpayer
18qualified to do business in this state or the date the taxpayer
19obtained an account number from the Franchise Tax Board.
20(2) With regard to a limited liability company, the applicable
21period shall be the period beginning on January 1, 2014, or the
22first day of the taxable year for which the taxpayer has failed to
23file a return, whichever is later.
24(d) If a taxpayer fails to file
a tax return required under this part,
25to pay any tax or other amount owing to the Franchise Tax Board
26under this part or to file any statement or return required under
27Section 23772 or 23774, within 60 days after the Franchise Tax
28Board mails a written demand therefor, any contract made in this
29state by the taxpayer during the period beginning at the end of the
3060-day demand period and ending on the date relief is granted
31under Section 23305.1, or the date the taxpayer qualifies to do
32business in this state, whichever is earlier, shall be voidable at the
33instance of any party to the contract other than the taxpayer. This
34subdivision shall apply only to a taxpayer if the taxpayer has
an
35account number from the Franchise Tax Board, but has not
36qualified to do business under the Corporations Code. In the case
37of a taxpayer that has not complied with the 60-day demand, the
38taxpayer’s name, Franchise Tax Board account number, date of
P3 1the demand, date of the first day after the end of the 60-day demand
2period, and the fact that the taxpayer did not within that period
3pay the tax or other amount or file the statement or return, as the
4case may be, shall be a matter of public record.
Section 23305.5 of the Revenue and Taxation Code
6 is amended to read:
For purposes of this article:
8(a) “Taxpayer” means either:
9(1) A corporation subject to tax under this chapter.
10(2) A business entity organized under a statute or law, or a state
11or a federally recognized Indian Tribe, or another jurisdiction, if
12the statute or law describes or refers to the entity as a limited
13liability company or if regulations of the Franchise Tax Board
14identify a business entity organized under the laws of a foreign
15country as a limited liability company.
16(b) With regard to a limited liability company:
17(1) “Articles of incorporation” shall include a limited liability
18company’s articles of organization.
19(2) “Tax” shall include the tax and fee imposed by Sections
2017941 and 17942, or former Sections 23091 and 23092,
21respectively.
This act is an urgency statute necessary for the
23immediate preservation of the public peace, health, or safety within
24the meaning of Article IV of the Constitution and shall go into
25immediate effect. The facts constituting the necessity are:
26In order to ensure that all entities doing business in California
27are treated equally under thebegin delete Rev and Taxend deletebegin insert Revenue and Taxationend insert
28 Code, it is necessary that this act take effect immediately.
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