Reviving a suspended or forfeited business entity in California has been a draconian act since the inception of a "corporate death penalty" in the 19th century. On paper, today's taxpayers are offered more remedies for suspensions and unpaid taxes than a death penalty due to a change of law in the early 20th century; however, California's administrative hurdles, at times, make the corporate death penalty look almost humane. Suspensions serve the same purpose today as in the early 20th century: the application of economic and procedural obstacles to a delinquent business entity are designed to pressure that entity to pay its California taxes.
Under California law, a domestic company can be suspended whereas a foreign entity can be forfeited (both processes hereinafter referred to as a "suspension"), and both lead to similar consequences. Upon suspension of an entity, the Franchise Tax Board (FTB) will transmit a corporation's name to the Secretary of State website, and the corporation loses all powers, rights, and privileges. In practice this leads to three categories of significant consequences: a loss of litigation capacity, contract voidability, and personal exposure to those who represent the entity.
This legacy of a corporate death leaves taxpayers in suspended animation. Specifically, business entities can be stripped of rights, and left frustrated with how to remedy their situation. The consequences of a suspension do not stop at California's agencies, judiciary, and borders. For example, the United States Tax Court held a corporation filed its petition to remedy too late due to a suspension by the FTB.
Considering all of these issues and frustrations, this article seeks to shed light on what can be an arduous process of reviving a suspended corporation, and offers a few strategies for navigating the challenging passage.
LINKS
Click below for a PDF of “Bring My Business Back to Life: Understanding Franchise Tax Board Suspensions, Forfeitures, and Revivals in California,” authored by Samuel Weinstein Astorga, published in the August 2026 issue of Practical Tax Strategies, a Thomson Reuters Journal.